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Bond Yield Climbs after RBI Decision to Pause - HDFC Securities
* Rupee gains in line with the Asian currencies even after RBI hold the rate unchanged. RBI decision to pause has come as a surprise to most market participants. MPC maintain accommodative stance, rupee took it positively and gained on higher dollar inflows in FDI and FPI.
* Rupee opened with gain of 3 paise to 7.26 from previous close of 71.29 and last quoted at 71.33 a dollar.
* The Reserve Bank of India's shock hold on interest rates suggests rising inflation is a bigger concern than slumping growth. We believe pause in policy rate will delay a recovery in the economy.
* RBI cut its full year growth forecast for the fiscal year through March to 5% from 6.1%, raised its inflation forecast for the second half of the fiscal year 4.7%-5.1% from 3.5%-3.7% seen previously.
* The benchmark 10 year yields climb 15bps, most since Sept. 20, 6.61% on Thursday after rising to 6.62%.
* Asian currencies were mostly higher as President Trump suggested trade talks with China were progressing ahead of Dec. 15 when the next tranche of U.S. tariffs kick in.
* The dollar held near a one-month low. U.S. payrolls data later today can't derail the dollar's move lower next week as the U.K. election and ECB rate decision should boost sterling and the euro.
* Pound was steady at 1.3159 after rising for a fifth day on Thursday, the longest streak since June, ahead of next week’s election.
USDINR DECEMBER FUT. :
* USDINR December futures took a resistance at super trend level of 72.04 and about to break the bottom 71.32.
* Momentum oscillator, RSI given negative cross over heading towards oversold zone indicating further weakness.
* The breaking of 71.32 confirms the lower top lower bottom and price could fall to 70.70 level while resist at 72.05.
USDINR DEC. FUT. DAILY CHARTS
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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