“We do today what they won’t, so tomorrow we can accomplish what they can’t.” – Dwayne ‘The Rock’ Johnson
Morning !!
USDINR trade is performing well. Current market price is 81.72 and a 1.50% return is pretty fantastic so we look to close out the position on a trailing SL basis at 81.85. Let me explain the rationale here. The pair has been holding the 81.70 support level and 81.85 resistance level since open. So if we take out the highs of the day, we square and look for better spots to re-initiate the position. The run down has been sharp so taking profit seems logical. However, we square off the position at the 81.55 - 81.60 zone.
We have the US CPI data and India CPI data due to release tomorrow and position adjustment could see USD strengthen.
On the OIS front, 1Y OIS has been pretty range bound 6.55% - 6.75% with market pricing in 25 bps hike in the Feb 23 policy and is divided on the possibility of a 25 bps hike in the Apr policy. There are no fresh catalysts to guide the direction on the rates. Liquidity will be an important metric (refer to my earlier article Liquidity) as that will drive whether we operate at the SDF or the MSF Rates and hence the OIS rates. 1x5 OIS is trading at 33 bps.
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