Emerging Market FX: Closing Out USDINR Trade +300pips
Emerging Market FX: I am closing out my Long USDINR for a 3% or 300pip profit. from entry. Overnight the he FED held rates unchanged in the range of 0.25-0.50% as expected but the accompanying press statement highlighted prevailing downside risks this year, pushing back expectation of a hike in March. The central bank will “closely monitor global economic and financial developments” and reiterated that “economic conditions will evolve in a manner that will warrant only gradual increases in Fed funds rate”. Data wise, growth in the property sector remained firm. USD weakened, the USD Dollar Index fell 0.46% to 98.90, overturning earlier gains before the FOMC rate announcement as the Fed is seen to be more biased towards a slower pace of policy tightening.
The USD Index is developing a mature rising wedge pattern as highlighted in yesterdays Dollar Hollar note, which suggests the potential for anther leg lower before/if we see a break higher, this will likely prompt a correction in the USDINR as such I am going to bank profits and move to the sidelines. I will continue to monitor the price action in this pair and may reengage long exposure from lower levels.