Globally,
US FED president, Powell announced that FED will target average inflation of
2%, which necessarily means that FED will allow inflation to overshoot 2% to
make-up for lower inflation in earlier period. Thus, interest rate hikes and
its quantum would be later and lower. Ironically,
market reaction to FED’s policy change was a bit counter intuitive as US 10 year
bond yield surged more than 10 bps to 0.77%. On other hand, Dollar index and US
equity were largely flat after the speech.
On
domestic front, G-sec bonds are likely trade with bearish bias amid spike in US
yields. Interestingly, RBI’s operation twist of INR 20,000 cr remained
insignificant in stemming the fall in bond prices. India’s 10 year bond yield
is trading near 6.19% can spike toward 6.30% in short term. Yesterday, USDINR
pair continued its downward journey as RBI was yet again missing from action. USDINR
pair has tumbled to 73.60 levels in early trades. On weekly charts, USDINR pair
has significant support near 73.50-55 levels, if broken on weekly basis there
is little supports till 72.00
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