USDINR 77.52 ▲ 0.05%.

EUR/USD 1.0701 ▲ 0.20%.

GBP/USD 1.2588 ▲ 0.19%.

India 10-Year Bond Yield 7.298 ▼ 0.10%.

US 10-Year Bond Yield  2.752 ▲ 0.19%.

ADXY 103.33 ▼ 0.09%.

Brent Oil 111.48 ▲ 0.32%.

Gold 1,849.18 ▲  0.16%.

NIFTY 50  16,040.30 ▲ 0.09%.

Global developments

US durable goods orders and business investment rose by lower than expected in April. Minutes of the Fed meeting indicated most Fed members were of the view that the economy was strong, labor markets were tight and inflation was high, and that the Fed needed to move expeditiously to neutral rates. Most Fed members felt 50bps hikes at the next couple of meetings were appropriate. Many also said it would be appropriate to consider the sale of Mortgage-Backed securities.

US Q1 GDP revised estimate and core PCE data are due today.

Price action across assets

US yields are flat post the FOMC minutes. The Dollar has weakened a bit. Euro had come off highs around 1.0740 to 1.0660 but has recovered some lost ground to get back to 1.07. S&P500 ended about 1% higher. Crude prices are steady with Brent at USD 114 per barrel. EIA data indicated stockpiles fell more than expected.

U.S. core capital goods orders growth slows in April; shipments increase.

Domestic developments

India has capped sugar exports and even for exports within the cap, prior approval would be required. The government has announced a slew of measures to ward off inflationary pressures in recent times. We believe this is a better way of addressing supply-side inflation. There is little the monetary policy can do to contain this kind of inflation.

Government officials said that the government does not need to go for additional borrowing at this point.

USD/INR

It was yet another narrow range day for the Rupee yesterday. USD/INR had broken 77.50 on the downside but recovered to end flat at 77.53.

3m ATMF implied Vols have come off drastically after governor Das' comment that RBI would not allow runaway depreciation of the Rupee. 3M ATMF implied volatility ended 30bps lower at 5.85%. 1y forward yield was unchanged at 3.84%.

Bonds and rates

Domestic bonds and rates rallied, cheering the fiscal side measures taken by the government to contain inflation. These measures would reduce pressure on the MPC to keep tightening aggressively. 5y OIS dropped 10bps to 6.83%. The yield on the benchmark 10y ended 6bps lower at 7.30%. Lower US yields also fuelled the rally.

Equities

The Nifty slid lower through the session and ended 0.6% lower at 16025. IT stocks were among the major laggards and dragged the index lower. 

Strategy

Exporters are advised to cover on upticks towards 77.90. Importers are suggested to cover on dips towards 76.80. The 3M range for USDINR is 75.50–78.30 and the 6M range is 75.00–78.90.

fxsoriginal

German economy dodges recession as war, pandemic weigh.

FX outlook of the day

USD/INR (Spot: 77.54)

It was yet another narrow range day for the Indian rupee yesterday. The USDINR pair had broken 77.50 on the downside but recovered to end flat at 77.53. Domestic bonds and rates rallied, cheering the fiscal side measures taken by the government to contain inflation. US yields are flat post the FOMC minutes. The Dollar has weakened a bit. Minutes of the Fed meeting indicated most Fed members were of the view that the economy was strong, labor markets were tight and inflation was high, and that the Fed needed to move expeditiously to neutral rates. The pair is expected to trade with a sideways bias. Focus to be on the US Q1 GDP revised estimate and core PCE data due today. The intraday range for the pair is expected to be between 77.40-77.70.

EUR/USD (Spot: 1.0702)

EURUSD stays on the way to reverse the pullback from a monthly high, picking up bids to 1.0685 during the Asian session. The US dollar’s failures to cheer the latest FOMC Minutes contradict the Euro’s ability to cheer hawkish speeches by ECB members supporting the pair. ECB policymakers were more hawkish and underpinned the bloc’s currency despite the economic fears raised by the region’s Financial Stability Review (FSR). FSR warned about an abrupt increase in real interest rates suggesting it could induce corrections in the real estate market. On the other hand, ECB Chief Economist Philip Lane reiterated on Wednesday that it was appropriate to normalize the monetary policy. There is no macro data to be released from the bloc. The pair is expected to trade in the range of 1.0650 to 1.0740.

GBP/USD (Spot: 1.2957)

The British pound recovers some ground on Wednesday during the US session, bouncing near weekly lows around 1.2480s and back above the 1.2550 figure grinding higher. As per the Fed meeting minutes, policymakers endorsed the 50 basis points (bps) of rate hikes for the next couple of meetings. However, statements like, “it would be appropriate to consider sales of mortgage-backed securities,” seemed to have raised doubts about the rate increases past September, which in turn weighed on the US dollar after release. US April’s Durable Goods Orders grew at a slower pace than foreseen but kept positive. In the absence of any macro data and major trigger from the UK, market participants will be looking forward to US GDP data being released later during the day. The pair is expected to trade in the range of 1.2540 to 1.2630.

USD/JPY (Spot: 127.39)

The USDJPY pair surrendered its modest intraday gains and was last seen hovering near the lower end of the daily trading range, just below the 127.00 mark. The market sentiment remains fragile amid growing concerns about softening global economic growth amid the prospects for a more aggressive move by major central banks to constrain inflation. BOJ Governor, Kuroda stated that in Japan, households' pent-up demand and wage growth have been modest compared with the United States and European countries. He repeatedly stressed the BOJ's resolve to keep monetary policy ultra-loose on the view a recent rise in Japan's inflation will be short-lived, and that the country's fragile economy still needs monetary support. The pair is expected to trade in the range of 126.90 to 127.80.

Japan to urge moving ahead with 'green' GDP indicator - draft.

Economic calendar

fxsoriginal

This report has been prepared by IFA Global. IFA Global shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. IFA Global nor any of directors, employees, agents or representatives shall be held liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. No liability whatsoever is accepted for any loss arising (whether direct or consequential) from any use of the information contained in this report. This statement, prepared specifically at the addressee(s) request is for information contained in this statement. All market prices, service taxes and other levies are subject to change without notice. Also the value, income, appreciation, returns, yield of any of the securities or any other financial instruments mentioned in this statement are based on current market conditions and as per the last details available with us and subject to change. The levels and bases of, and reliefs from, taxation can change. The securities / units / other instruments mentioned in this report may or may not be live at the time of statement generation. Please note, however, that some data has been derived from sources that we believe to be reliable but is not guaranteed. Please review this information for accuracy as IFA Global cannot be responsible for omitted or misstated data. IFA Global is not liable for any delay in the receipt of this statement. This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject IFA Global to any registration or licensing requirements within such jurisdiction. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. IFA Global reserves the right to make modifications and alterations to this statement as may be required from time to time. However, IFA Global is under no obligation to update or keep the information current. Nevertheless, IFA Global is committed to providing independent and transparent information to its client and would be happy to provide any information in response to specific client queries. Neither IFA Global nor any of its directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The information provided in these report remains, unless otherwise stated, the copyright of IFA Global. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright IFA Global and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 

EUR/USD News

GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 

GBP/USD News

Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures