DAILY MACRO
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