These programmes could attract USD 15-20 billion of inflows relatively quickly and provide much needed breathing space for policymakers to address India’s long-term structural problems, it added. “Policymakers, however, still remain reluctant to introduce these schemes,” Barclays said. Meanwhile, the RBI has partially eased its recent tightening measures, reverting to purchases of government bonds under its open isa etf strategies market operations (OMOs), as well as offering temporary relief to banks’ bond investment and liquidity maintenance requirements. “Measures to improve liquidity in Indian rates markets are positive for government bonds, although the impact on the the rupee is more ambiguous,” Barclays said. It further noted that the tightening measures implemented in stages since July 15 were unduly harsh on market liquidity and interest rates without providing commensurate support for the rupee. “In fact, we felt the measures had a high risk of being counterproductive, and, in the event, they failed to support the INR,” it said.
FOREX-Dollar rises to near 3-wk high vs yen, higher US bond yields support
Follow Ilya on Twitter at @IlyaSpivak To be added to Ilya’s e-mail distribution list, please CLICK HERE New to FX? Watch this Video . For live market updates, visit the Real Time News Feed DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM .
Forex: USD/JPY Technical Analysis – Critical Resistance in Play
10-year Treasury yield last stood near 2.897 percent, having set a two-year high of 2.936 percent on Thursday. The recent rise in U.S. bond yields, driven by expectations the Federal Reserve may start to unwind its stimulus as early as next month, has increased the attractiveness of dollar-denominated assets. Treasury yields got a further push higher after minutes of the Fed’s July meeting released on Wednesday did little to change market expectations of the Fed’s tapering timetable.
Forex – NZD/USD lower after China PMI
The unemployment rate guidance is clearly specified as conditional. For many, a less controversial option for the FOMC would be the introduction of a new +1.5% downside inflation threshold. The market could interpret this as a wholly symbolic attempt to drive home the message that a tapering of asset purchases does not have any implications for timing of future rate hikes. Its been described as symbolic, because it would never naturally impede any future tightening by the Fed. Would Bernanke and his fellow cohorts ever consider a rate hike when projecting that next years inflation rate will be below 1.5%? Its certainly a mouthful, and historically a non-starter to the better informed that insist rate hikes would ever be given serious consideration under such an inflation outlook. In theory, this suggestion is anything but symbolic it has no practical significance.
Boosting forex inflows ‘key’ to supporting Indian rupee: Barclays
The break of 131.96 resistance suggests that rebound from 124.95 is resuming and current rally would likely break through 132.73 resistance. But, current price action isseen as part of the consolidation from 133.80 and so, expect strong resistance from 133.80 to limit Northside and bring another fall to extend the consolidation pattern. On the downside, A break below the minor support at 130.28 the minor support will turn bias back to the Southside for the support at127.96 first. The Big Picture,this developmentaugurs that the medium term up trend from 94.11 has topped out at 133.80 on Bearish divergencecondition in the daily MACD. Consolidation from there could extend with another fall to target 119.10 cluster support , 38.2% Fibo etracement of 94.11 to 133.80 at 118.63. Strong support would be seen there, onthe initial attempt.
Forex: USDJPY and EURNZD Offer Trades for Different Market Directions
The Turkish Central Bank has responded with a larger than usual daily dollar auction of $350-million, but that support has yet to wholly filter through. At present, the currency has stalled just ahead of the psychological 1.99 threshold. Its only a matter of time before the dollar gets its second wind, presumably from North America. Promising Data Buoys Euro The 17-member single currency has not been immune to the dollars flight. Already this morning the EUR has endured its own wild ride as investors digested mixed French, German, and Eurozone manufacturing surveys.
Forex Traders Face Mixed Fed Views As Emerging Markets Stumble
“Issuance of forex-denominated bonds or a deposit scheme targeting nonresident Indians (NRIs) remain the most potent options, in our view,” Barclays said. These programmes could attract USD 15-20 billion of inflows relatively quickly and provide much needed breathing space for policymakers to address India’s long-term structural problems, it added. “Policymakers, however, still remain reluctant to introduce these schemes,” Barclays said. Meanwhile, the RBI has partially eased its recent tightening measures, reverting to purchases of government bonds under its open market operations (OMOs), as well as offering temporary relief to banks’ bond investment and liquidity maintenance requirements. “Measures to improve liquidity in Indian rates markets are positive for government bonds, although the impact on the the rupee is more ambiguous,” Barclays said. It further noted that the tightening measures implemented in stages since July 15 were unduly harsh on market liquidity and interest rates without providing commensurate support for the rupee.
Forex Traders Eagerly Await July’s FOMC Minutes
China’s manufacturing growth has started to stabilise on the back of modest improvements of new business and output. This is mainly driven by the initial filtering through of recent fine-tuning measures and companies’ restocking activities, despite the continuous external weakness. We expect further filtering through, which is likely to deliver some upside surprises to China’s growth in the coming months,” said Hongbin Qu, Chief Economist, China & Co. Head of Asian Economic Research at HSBC in a report.
Forex Outlook: EUR/JPY
While the relationship between the US dollar and its Taper interest and the S&P 500 with its proclivities towards moral hazard remains my top concern, there are trade opportunities that don’t require a full-scale fundamental drive to play out. In today’s video, we discuss the fundamental contradiction between Japanese yen and New Zealand dollar setups; and why they can both play out in these markets. Find out what event risk can threaten the trade setups discussed in today’s video with the DailyFX Economic Calendar . Market conditions change, and our strategy should reflect those changes.