INDIA: Country Wrap: Reserve Bank of India on Hold
Market Summary: The NIFTY 50 fell for eight consecutive day and following the RBI decision, has moved higher by +0.20% whilst the Rupee was up marginally to 88.72 and bonds were weakening with the 10-Yr +1.5bp at 6.59%
- The Central Bank in India, the RBI, kept its key rate unchanged at 5.5% today. The unanimous vote, consistent with the last meeting, sees the central bank retaining its neutral stance . Inflation remains subdued yet the tariff situation remains and the focus on India by the US and EU for purchases of Russian oil creates uncertainty which it seems the Central Bank wants to see play out. The economy is not suffering under the weight of tariffs with PMIs near all time highs, growth topping estimates and inflation controlled. The main challenge is with the currency which is down over 3.5% over the last month. Bonds are performing well today with the IGB 10-YR lower by -2.5bps at 6.55%. The RBI has one last meeting for the year on December 5 by which potentially greater clarity may exist over tariffs. (source MNI)
- India witnessed its strongest monsoon in five years, lifting prospects for crops such as rice and pulses and raising hopes that food prices may ease further. Rainfall from June to September, which irrigates about half of the country’s farmland and is important for the next planting season, was 937.2 millimeters. That was 8% higher than the long-term average, and the best rainy season since 2020, according to data compiled by the India Meteorological Department. The early arrival of the monsoon this year, followed by good precipitation, helped farmers allocate more land to crops such as rice, pulses and sugar cane, according to the farm ministry. (source BBG)
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURUSD TECHS: Primary Trend Condition Is Bullish
- RES 4: 1.1851 High Sep 10 2021
- RES 3: 1.1829 High Jul 01 and the bull trigger
- RES 2: 1.1789 High Jul 24
- RES 1: 1.1743 High Aug 22
- PRICE: 1.1710 @ 06:07 BST Sep 1
- SUP 1: 1.1574/1.1528 Low Aug 27 / Low Aug 5
- SUP 2: 1.1392 Low Aug 1 and bear trigger
- SUP 3: 1.1373 Low Jun 10
- SUP 4: 1.1313 Low May 30
EURUSD has recovered from last week’s low. The trend set-up is bullish and short-term pullbacks are considered corrective. Note that the pair has pierced key support around the 50-day EMA, currently at 1.1607. A clear break of the average would signal scope for a deeper retracement and potentially expose key M/T support at 1.1392, the Aug 1 low. Key resistance and the bull trigger is at 1.1829, the Jul 1 high. A break would resume the primary uptrend.
BUND TECHS: (U5) Resistance At The 50-Day EMA Remains Intact
- RES 4: 130.60 High Aug 5 and a key resistance
- RES 3: 130.26 High Aug 8
- RES 2: 130.06 High Aug 14
- RES 1: 129.77/90 50-day EMA / High Aug 28
- PRICE: 129.38 @ 05:45 BST Sep 1
- SUP 1: 129.15/128.64 Low Aug 26 / 15 and the bear trigger
- SUP 2: 128.40 Low Apr 9
- SUP 3: 128.19 Low Mar 27 (cont)
- SUP 4: 127.83 76.4% retracement of the Mar 11 - Apr 7 bull leg (cont)
Bund futures continue to trade above their August lows. Resistance at the 50-day EMA, at 129.77, has recently been pierced. A clear breach of the EMA would signal scope for a stronger recovery within the multi-month range. This would open 130.06, the Aug 14 high. Key support and the bear trigger lies at 128.64. Clearance of this level would reinstate the recent bearish theme.
OIL: Crude Continues Trending Lower As Global Output Remains The Focus
After falling close to a percent on Friday, oil prices have trended lower again during today’s APAC trading as risk appetite softened and expected excess supply going forward weighed. WTI is down 0.4% to $63.73/bbl after a trough of $63.66. Brent is 0.4% lower at $67.18/bbl after falling to $67.12. The USD index is little changed.
- OPEC+ will meet on September 7 to decide its October production target. There are still 1.65mbd of previous voluntary output cuts that could be unwound. The market is already very nervous about the increase in OPEC supply announced to date and will watch the outcome of the meeting closely.
- Progress towards a Ukraine peace deal appears to have stalled and with it any chance of an easing of sanctions on Russia. Last week the US imposed a 25% punitive tariff on India for continuing to buy Russian crude. It is attending the summit in China and PM Modi is scheduled to meet with President Putin on Monday.
- The focus of the week is likely Friday’s US August payrolls release with Bloomberg consensus expecting a 75k rise in jobs but the unemployment rate rising 0.1pp to 4.3%.
- The US is closed for a holiday today. Later ECB President Lagarde speaks and ECB’s Schnabel and Cipollone appear. European August manufacturing PMIs and euro area July unemployment are released.
