INR: USD/INR Rallies to Fresh High, Hawkish Das Comments Overlooked
Nov-06 11:17
Wednesday's gains marked the strongest session for USD/INR since June, with the election-inspired greenback rally placing the pair at a fresh record high. INR closed 0.2% lower versus the dollar, though losses are relatively muted compared to that of broader EM FX, with RBI intervention likely limiting more aggressive INR weakening.
- The Nifty and Sensex indices rallied over 1%, with shares of major Indian tech exporters leading gains. Analysts cited by Bloomberg note that any corporate tax rate cuts in the US will have a tailwind for IT budgets, which in turn is a positive for Indian IT companies.
- In the run-up to the election, Trump vowed to take reciprocal action against countries for imposing high tariffs on American goods. Last month, he accused India specifically of being the “biggest charger” of tariffs.
- Comments from RBI Governor Das crossed the wires earlier today, but were largely overlooked given the wider focus on the US election result. The Governor said the central bank’s change in stance to “neutral” at the October meeting does not necessarily indicate that a rate cut is forthcoming at the December meeting, while flagging “significant upside risk to inflation.” The Governor’s comments were largely in line with previous hawkish comms.
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SONIA: Call fly seller
Oct-07 11:08
ERX4 97.12/97.25/97.37c fly, sold from 3.25 down to 2.5 in 10.5k total.
CROSS ASSET: Bonds hovers at session lows.
Oct-07 11:02
- The British Pound extends further losses against the Dollar, Cable is now slowly clearing Friday's low, with the next support area now coming at 1.3002.
- GBP has taken over the Kiwi as the worst performer against the Dollar in G10s.
- And worth keeping an eye on Govies here, Bund, Tnotes and Gilt are making another attempt at the Next Yield levels.
US TSYS: Large Bear Flattening Extends With 2s10s Tilting Inverted
Oct-07 10:56
- Treasuries have seen an extension of Friday’s beat flattening pressure in a combination of overseas reaction to the strong payrolls report plus sharp increase in oil futures.
- Cash yields are 2bp (30s) to 8.8bps (2s) higher, with 2Y yields breaching 4.00% for the first time since Aug 23, currently 4.01%.
- 2s10s has dropped to -0.2bps (-4.3bp) having been close to 15bp prior to payrolls and seen ytd highs of 24bp earlier in September.
- It was last more notably inverted prior to the August payrolls report on Sep 6.
- TYZ4 sits at 112-17+ (- 09+) close to earlier lows of 112-16+ on heavy volumes of 580k. Recent moves have undermined a prior bullish theme and highlight potential for a continuation lower with support at 112-14+ (38.2% retrace of Apr – Sep bull cycle) before a round 112-00.
- Data: Consumer credit Aug (1500ET)
- Fedspeak: Gov. Bowman in banking Q&A (1300ET), Kashkari in Q&A (1350ET), Bostic moderates Q&A (1800ET), Musalem speaks on the economy and policy (1830ET, incl text).
