"Daily habits forge your identity"
US stocks made broad gains and USD downside momentum held into yesterday's close on Fed speak. Market sentiment was also lifted on reports that China is considering fresh stimulus measures to the tune of CNY 1 trn ( USD 137 bn). Comments from Federal Reserve member Logan "If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the fed-funds rate". The same message was echoed from other Fed speakers - Bostic, Kashkari and Waller.
Crude oil prices and Gold prices closed the day at the highs on the Israel - Hamas conflict.
The markets continued to push the Dec 24 FFR pricing lower to 4.51% from 4.55% the prior day. There is significant divergence between the Fed's guided path (5.10%) and the current implied market pricing.
For the day, we have the US PPI release and FOMC meeting minutes and the more important CPI data tomorrow.
On the domestic front, USDINR continued to be range bound between 83.15 - 83.30 and is expected to open today at 83.20 levels. IMF raised India's growth forecast for the current fiscal year to 6.30% from 6.1%. Risk sentiment is positive as Asian equities are trading higher barring Japan which is trading marginally in the red.
While the market reaction has been very positive despite the geopolitical events, I think the situation is extremely fluid and the best way to trade will be tactical longs / shorts rather than take a broad directional call on the USD.
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