On Monday, USDINR likely to start session with gap up from Friday session despite greenback weakened broadly early in Asia trade, but barely enough to trim its biggest surge since June from Friday. Currency markets have taken cues from the global bond market, where yields have surged in anticipation of an accelerated economic recovery.
Last session (Friday) , At interbank market, the local unit opened at 73.04/05 against greenback, then lost further ground to touch an intra-day low of 73.4950/5050. It finally finished at 73.47/48 against dollar, registering a massive fall of 1.06 over its previous close.
India 10Yr yield at 6.2290.
NOTE :-
Exporters must start covering medium term exposure with favorable premium. Covering must be in tranches.
INTRADAY RANGE - 73.01 ( 73.47 - 73.92 ) 74.38
GLOBAL OUTLOOKS
The aggressive bond selling implies a bet that global central bankers will need to tighten policy much earlier than they have so far been forecasting.
Yields on U.S. 10-year notes came off to 1.41%, from last week's peak of 1.61%, though they still ended last week 11 basis points higher and were up 50 basis points on the year so far.
Bond bear market was now one of the most severe on record with the annualized price return from 10-year U.S. govt bonds down 29% since last August, with Australia off 19%, the UK 16% and Canada 10%.
Riskier currencies and those exposed to commodities bounced a little after taking a beating late last week, with the Australian and Canadian dollars up and emerging markets from Brazil to Turkey looking steadier.
Asian shares advance as some semblance of calm returned to bond markets after last week's wild ride, while progress in the huge U.S. stimulus package underpinned optimism about the global economy and sent oil prices higher.
The rout owed much to expectations of faster U.S. growth as the House passed President Joe Biden's $1.9 trillion coronavirus relief package, sending it to Senate.
Gold steadied after its biggest monthly slump since late 2016 as investor focus remained on bond yields and the outlook for growth.
Last week’s sell-off in global bonds stabilized after central banks from Asia to Europe moved to calm a panic that had sent Treasury yields to their highest level in a year. Bets on accelerating inflation are raising concerns that there could be a pullback in monetary policy support despite assurances from the Federal Reserve that higher yields reflect economic optimism for a solid recovery.
Oil prices extended their gains ahead of an OPEC meeting this week where supply could be increased.
The cryptocurrency market faced another day of downward pressure as the unease in the traditional markets continues to spread following the recent interest rate spike on the 10-year U.S. Treasury bond.
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