USD/INR Spot:
The rally lost momentum above the upper end of 50.15-50.65 range (high of 50.68) triggering April 2012 dollar sell (high of 51.15). No change in view; let us stick to this range but not to chase beyond 50.15-50.00 (cover your shorts there and look to cover up to 15-30 day imports).
USD/INR FX Premium:
lost momentum above hgiher end of 8.35-8.85% (3M) and 6.5-6.75% (12M) for marginal reversal but no strong momentum seen for extension into lower end. Stay with this range.
EUR/USD:
Do not stay short as upward momentum is good for extension into 1.3325 for further extension into 1.34 minimum. Look to buy 1.3225-1.3175 for these objectives.
USD/JPY:
The upward momentum is losing steam ahead of 84.00-84.25 and looks good for correction into 83.25-82.50 before strong reversal. Can trade end-to-end of this zone.
EUR/JPY:
just short of the sell zone (t/p or initiation) at 111.25-111.75 (high at 111.15) but no sign of reversal as yet. Watch consolidation at 110.50-111.50; the reversal trigger can either be from EUR/USD or USD/JPY.
Bond/OIS market:
Pressure on RBI to cut rates is in play now providing bit of ease in 10Y bond yiled below 8.40%; 1Y OIS rate below 8.20% and 5Y OIS below 7.60%. Let us continue to watch consolidation at 8.35-8.45%; 8.15-8.25% and 7.55-7.65% respectively and be neutral on break-out direction. Needless to say, there is significant dilution in post-budget bearish set up. Need to plan trading strategies looking for 25 bps rate cut in April (policy rate at 8.25%); 25 bps rate cut in June (policy rate at 8%) and shift into CRR cut mode in July to ease operative policy rate from Repo rate to Reverse Repo rate. We may not see more than 50 bps rate cut in FY13 with possibility of 1.5% downward shift in operative policy rate. These expectations will limit weakness in 10Y bond at 8.50-8.65% and 5Y OIS rate capped at 7.75%.
Moses Harding
The rally lost momentum above the upper end of 50.15-50.65 range (high of 50.68) triggering April 2012 dollar sell (high of 51.15). No change in view; let us stick to this range but not to chase beyond 50.15-50.00 (cover your shorts there and look to cover up to 15-30 day imports).
USD/INR FX Premium:
lost momentum above hgiher end of 8.35-8.85% (3M) and 6.5-6.75% (12M) for marginal reversal but no strong momentum seen for extension into lower end. Stay with this range.
EUR/USD:
Do not stay short as upward momentum is good for extension into 1.3325 for further extension into 1.34 minimum. Look to buy 1.3225-1.3175 for these objectives.
USD/JPY:
The upward momentum is losing steam ahead of 84.00-84.25 and looks good for correction into 83.25-82.50 before strong reversal. Can trade end-to-end of this zone.
EUR/JPY:
just short of the sell zone (t/p or initiation) at 111.25-111.75 (high at 111.15) but no sign of reversal as yet. Watch consolidation at 110.50-111.50; the reversal trigger can either be from EUR/USD or USD/JPY.
Bond/OIS market:
Pressure on RBI to cut rates is in play now providing bit of ease in 10Y bond yiled below 8.40%; 1Y OIS rate below 8.20% and 5Y OIS below 7.60%. Let us continue to watch consolidation at 8.35-8.45%; 8.15-8.25% and 7.55-7.65% respectively and be neutral on break-out direction. Needless to say, there is significant dilution in post-budget bearish set up. Need to plan trading strategies looking for 25 bps rate cut in April (policy rate at 8.25%); 25 bps rate cut in June (policy rate at 8%) and shift into CRR cut mode in July to ease operative policy rate from Repo rate to Reverse Repo rate. We may not see more than 50 bps rate cut in FY13 with possibility of 1.5% downward shift in operative policy rate. These expectations will limit weakness in 10Y bond at 8.50-8.65% and 5Y OIS rate capped at 7.75%.
Moses Harding
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