INR: USDINR Falls Through Key Trendline Support on Trade Deal Hopes
USDINR has fallen a further 0.3% today, with the pair now below key trendline support drawn from the 2023 lows (see chart below). Optimism that India will be among the first trade deals agreed with the US has assisted the rupee’s strong recovery from the April lows, while renewed foreign investor inflows into local equities has also provided a tailwind – both the Nifty 50 and Sensex indices hit fresh year-to-date highs today, while foreign institutional investors have bought Indian shares for 11 straight sessions, the longest run of inflows in two years. For USDINR, the September 2024 low of 83.4388 provides next support.
- Broader risk sentiment has improved due to signs of progress in US-China talks, aiding INR gains, with local currency markets largely unfazed by escalating India-Pakistan tensions. Pakistan’s prime minister’s adviser on political affairs said Thursday that it is ready to join a probe by Indian officials into the attack. “A war between two nuclear powers doesn’t end in victory or defeat for either side but on destruction of both nations,” he said. Meanwhile, Vice President JD Vance said the US was working to ensure tensions don’t escalate into a broader regional conflict.
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GERMAN AUCTION PREVIEW: 2.50% Feb-35 Bund
This morning, Germany will hold its sixth 10-year Bund auction of the year. On offer will be E4.5bln of the 2.50% Feb-35 Bund.
- The size is in line with the last re-open of the 2.50% Feb-35 Bund on March 12.
- Recent auctions in the German 10y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 4.87x range since July), bid-to-offers (1.52x to 3.98x range since July) and the low prices above the secondary market mid-prices throughout 2024/5.
- For the last 2.50% Feb-35 Bund auction on March 12, the bid-to-cover stood at 2.12x, while the bid-to-offer came in at 1.62x.
- The next German auction will be E2bln of a (yet unspecified) Green line on April 8, while the 2.50% Feb-35 Bund will be reopened next on April 23, for E4.0bln.
- Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.
EQUITIES: Estoxx outright call seller
SX5E (20th June) 5300c, sold at 127.60 in 6.5k vs 2.86k at 5225.00.
COMMODITIES: Gold Trend Remains Bullish Following Sequence of Record Highs
WTI futures traded sharply higher Monday. This undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term. The rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme. On the downside, initial firm support to watch lies at $69.01, the 20-day EMA. A breach of this level would signal a potential reversal. The trend condition in Gold is unchanged, it remains bullish. The latest rally reinforces current conditions and confirms a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a Fibonacci projection. Support to watch lies at $3004.9, the 20-day EMA. A pullback would be considered corrective.
- WTI Crude down $0.2 or -0.28% at $71.09
- Natural Gas up $0.02 or +0.48% at $3.967
- Gold spot up $20.3 or +0.65% at $3133.08
- Copper up $3.7 or +0.73% at $505.7
- Silver up $0.31 or +0.93% at $34.0041
- Platinum down $6.15 or -0.62% at $985.32
