INR: USDINR Extending Weekly Advance as Crude Rally Continues
Jun-19 08:32
USDINR has risen a further 0.4% today, extending this week’s advance to almost 1% and placing the pair at its highest level since March. Rising oil prices on the back of the escalation in the Israel-Iran conflict has been a key rupee headwind given India is a net importer of the fuel, with Brent crude futures up over 20% on the month.
- Citing traders, Reuters note that dollar demand from importers has also weighed on the rupee, while weakness across equities combined with greenback strength post Fed has hampered the wider EM FX basket.
- Intraday gains for USDINR were exacerbated by the break of 86.7150, the Apr 9 high, turning focus towards the Feb 28 high of 87.5462 – which is around 0.75% above current levels. Above here, 87.9563, the record high posted in February, would mark next resistance.
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OPTIONS: Larger FX Option Pipeline
May-20 08:31
- EUR/USD: May21 $1.1140-50(E1.3bln), $1.1250(E1.1bln), $1.1390-05(E2.1bln); May22 $1.1175(E1.9bln); May23 $1.1145-50(E1.1bln), $1.1180-85(E1.1bln), $1.1300(E1.0bln), $1.1330-50(E1.3bln), $1.1400(E1.1bln)
- USD/JPY: May23 Y144.00($1.4bln), Y145.00($1.9bln)
- GBP/USD: May22 $1.3260-70(Gbp1.5bln)
- USD/CAD: May22 C$1.4050($1.3bln); May23 C$1.4000-15($1.2bln)
GILT SYNDICATION: 5.375% Jan-56 gilt: Update
May-20 08:30
- Guidance unchanged: 4.25% Dec-55 gilt (GB00BT7J0241) + 1.75bp/2.25bp
- Size: GBP benchmark (MNI expects GBP5.5-8.5bln)
- Books in excess of GBP57bln (inc JLM interest of GBP3.75bln)
- ISIN: GB00BT7J0241
- JLMs: BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs International Bank (B&D / DM) and Santander
- Settlement: 21 May 2025 (T+1)
- Maturity: 31 January 2056
- Coupon: 5.375%. Short first
- Timing: Books open, today's business (MNI expects books to close at 10:00BST)
From market source / MNI colour
BOE: Summary of Pill's opening remarks
May-20 08:30
- He sees May as a skip, but seems to still broadly support quarterly cuts.
- He thinks that the MPC started cutting too early - remember that he voted against the first cut in August 2024 (along with Mann, Greene and Haskel). He partly sees as his vote for a skip to make up for that.
- He again used the word "cautious" rather than "careful". This has become a buzzword with the MPC and is a stronger word than "careful".
- He still believes that disinflation is in process, but that there has been greater intrinsic inflation persistence - and this has changed the character of disinflation.
- He notes that the MPC has consistently underestimated inflation persistence, wage growth and the inflationary cost push shocks.
- He doesn't think there has been enough data yet to assess whether there has been a structural break in inflation persistence.
