We just had the RBI cut rates 25 bps but hinting at the lack of room for further easing given inflation pressures and message that was already in the market yesterday so we have seen short covering in USDINR even before the RBI statement was released, so INR one of the under-performers overnight. We are still running long INR and will stick with this for now as there seems to be good offering interest in spot above 54 the figure post RBI. We are running our long INR ag short KRW but we continue to see very good selling interest in USDKRW from exporters onshore and saw this again overnight. This saw agents come in on the bid around 1096/97 in spot, buying around 500 USD. Given this we will persevere with the cross for now. The big under-performer over night was THB oce again. Official comments about THB in the last couple of weeks have forced a re-assessment of the potetnail upside to THB from the RM community and we continue to see scaling down of THB positions from these names. Obviously the further we move away from the 28 level mentioned by officials the better the risk reward gets on getting long THB again. We would think 30.00 would prove to be strong resistance on the upside and a good level to have anothr go at USDTHB shorts. In our FX Strategy Weekly our strategy team thinks May will be the month of a dollar breakout. Trendiness has bottomed and interest rate differentials will begin mattering again, while positioning is no longer an obstacle. Sell AUD/USD and EUR/USD and buy USD/JPY.
Click here to read the full report: FX Daily
Deutsche Bank