2022-12-07 07:45:00


The narrative still centres around the  divergence between what Fed says they they plan to do to wrangle inflation, and what markets think  Fed will do.

Summer of the ever-shrinking U.S. trade deficit is over.For second straight month, US imported more in goods & services than it exported — increasing trade deficit by $4 billion to $78 billion in Oct.Nominal export growth slowed sharply to all major regions of the world & this could be a sign of weakening global economic conditions.

Sustained break of 21 dma  in USD index @ 106.47 to negate downside bias.Yesterday`s 104.89 low to stay in tact.

Thumbrule is range bound price action closer to recent peak in a fundamentally weakcurrency is bearish. Those who want to bet on EUR USD downside should have 100 HMA of 1.04948 as a risk defining level.Close below 21 dma @ 1.0364 & and 200dma @ 1.0357 would be bearish.

Diverging Fed-PBOC rate policies, doubts on China economic recovery support.
China YTD (Jan - Nov) trade data show both exports and imports rising (yuan terms).Focus turns to new nationwide Covid  rules due today.Politburo says necessary to promote opening up to outside world.6.9300-7.0000 consolidation

Surging cost of living prompting a swathe of strike plans.Industrial unrest will impact on the economy - UK set for a tough winter
Good news is that U.S.& Britain launch energy partnership to initially boost LNG supplies- 10 dma @1.2119 under pressure, a base on the close for this move, key support- break  brings 21dma at 1.1958.

Range yesterday 135.98-137.42.Thinning participation to relegate USD/JPY to range trading.Inside day likely with market cautious, thin, many side-lined for year.

USD/INR has risen 1.7% over past three sessions.Consistent outflows amidst continuing trade deficit - need of the hour is to alleviate the  stress of Cash dollar liquidity More than the token rate hike and all those lofty assertions, USDINR needs either a string of sell buy swaps or an innovative USD repo facility to alleviate the issue of plunging premiums. 82.50 82.80