IMF slashes Asia’s growth forecast to -2.2%

Abhishek Goenka IFA Global

The Sterling has rallied on comments from EU side Chief negotiator Barnier that a deal with UK is within reach. UK and EU are expected to restart negotiations and make an attempt to seal the deal by mid November.

US stocks were flat. US treasuries recovered post yesterday’s sell-off with 10y yield back to 0.80%. The US Dollar continued to weaken against majors.

With every passing day, as we approach closer to the election, a fiscal stimulus deal is becoming more and more unlikely. Even if the Democrats and the White House do manage to reach an agreement, the bill would have to be drafted and voted on by both the House and the Senate which looks difficult as we head closer to the election day. Focus will be on the 2nd US presidential debate between Biden and President Trump. US Weekly jobless claims data also due today.

Domestically, the Rupee did manage to break out of the 73.30-73.50 range. Persistent buying by nationalized banks on behalf of the central bank caused the Rupee to weaken despite broad based USD weakness. Rupee has weakened to 11.15 against the Yuan and one could fit the narrative of the government trying to build pressure on China by dis-incentivizing Indian firms from importing Chinese goods. Keeping Rupee weak in trade weighted terms makes exports more competitive too.

3m T-bill cut off came in at 3.19% lowest in recent times. Abundant banking system liquidity is continuing to weigh short end rates. Overnight MIBOR fixing too was much lower than usual at 3.50%. Focus will be on the first ever SDL OMO today. The RBI has also released operational guidelines pertaining to the 1 lakh cr on tap repo linked TLTRO.

USDINR is likely to open around 73.68 and trade 73.50-73.85 with up side bias.

Strategy: Exporters have been advised to cover confirmed order on upticks. Importers are advised to cover through options. The 3M range for USDINR is 72.50 – 74.50 and the 6M range is 72.50 – 75.40.

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Author

Abhishek Goenka

IFA Global

Mr. Abhishek Goenka is the Founder and CEO of IFA Global. He pilots the IFA Global strategic direction with a focus on relentlessly improving the existing offerings while constantly searching for the next generation of business excellence.

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