WEEKLY SYNOPSIS: 11/10/2019
|Currency Pairs||WEEKLY CLOSE||PRIOR WEEK CLOSE||% change|
Brent Crude closed at USD 60.65 VS prior week close of USD 58.50.
Nifty closed at 11305 vs prior week close of 11174.
10 Year G-SEC Yield closed at 6.51.
Major developments: It was a relatively quiet trading week for USDINR. The pair traded in the 70.80-71.22 range. It closed at 71.01, registering a nominal gain for USD. GBPINR climbed 2.64%, due to steep rally in Pound against USD. EURINR also recovered 0.82% w/w.
Indian Equity indices had a roller coaster ride and ended with gain of 1.17%.
Macro economic data continued to disappoint. IIP shrunk -1.1% in Aug. Mfrg declined -1.2%, consumer durables declined -9.1%, capital goods sector declined -21%, consumer non durables rose 4.1%. Auto sales declined 23% in Sept. However, there are reports that retail auto sales has started to climb in Oct. FX reserves climbed to USD 437 bn as RBI continued to mop up inflows. Moody’s cut Indian GDP growth rate to 5.8% for this fiscal.
FII’S have nett sold Rs 4656 Cr of Indian Equities in Oct . FII’S have nett bought Rs 40261 Cr of Indian Equities in this calendar Year till date. FII’S have nett sold Rs 932 Cr of Indian debt securities in Oct. FII’S have nett bought Rs 28217 Cr of Indian debt in this calendar year till date.
-USD ended the week lower against Euro and Pound. Global markets climbed on Friday as US President said that a significant phase 1 deal with China has been made covering Intellectual property rights, financial services and import of agri products.
US will delay the planned escalation of tariffs on USD 250B in Chinese imports to imports, supposed to take effect on October 15. Nevertheless, further 15% of tariffs an essentially all Chinese imports could still start on December 15, unless the second phase could be agreed. Earlier in the week, US blacklisted 28 Chinese companies, including surveillance technology company Hikvision citing Chinese human rights violations in a key Chinese province.
US FOMC minutes indicated that there was three way split over Sept rate cut. While majority favoured 25 bps cut, there was few members who felt that 50 bps rate cut may be necessary to preempt recession. There were also few members who even opposed 25 bps rate cut. FOMC minutes has clouded rate cut outlook going forward.
ECB policy meeting minutes showed rather wide division in opinion regarding the new stimulus package. That was inline with comments from ECB officials after that meeting. The accounts noted, “a number of reservations were expressed about individual elements of the proposed policy package”.
UK GDP contracted -0.1% mom in August, below expectation of 0.0% mom.
Sterling soared on brexit optimism as EU Chief negotiator signaled prospects of a new solution.
Important developments in coming week: US retail sales, EU CPI, Brexit talks, US-China trade talks.
Currency range forecast for coming week:
USDINR: 70.50-71.50, EURINR: 78-79, GBPINR: 88-92, JPYINR: 65-67.50.
Suggestion: Cover 1-2 month USD import payables on dips to 70.70/70.50. EURINR payables can be hedged at 77.75. EURINR receivables can be hedged closer to 79.25. GBPINR receivables hedging can be hold till 92.