IFM Artivcle Review

International Financial Management
MBA 4041F
CIA-3
News Article Analysis
Submitted to:
Prof. TS Ramachandran
By,
Palak Mehta (1928137)
‘MBAF3’
Institute of Management
CHRIST (DEEMED TO BE UNIVERSITY), Bengaluru
N1 01062020 India's Bid for Tighter Grip on Rupee Trading Is Put to Test-
Bloomberg.
India’s most ambitious step to get a tighter grip on rupee trading, which has been shifting to
markets like London and Singapore, is being put to the test as the nation’s banks start trading
the currency in offshore markets.
Twelve local lenders, including State Bank of India, Bank of Baroda, Axis Bank Ltd., and
ICICI Bank Ltd., can trade in the Non-Deliverable Forward market for the currency from
Monday. Reserve Bank of India Governor Shaktikanta Das had made a surprise
announcement in March allowing certain banks to trade the rupee offshore.
The South Asian nation is seeking to strengthen its regulatory grip on rupee trading as
blowouts in offshore prices tend to disrupt exchange rates for the currency. The move closely
follows India kicking-off its domestic NDF market in May with two exchanges starting
trading in forex-settled dollar/rupee contracts.
“Participation of Indian banks, who have real-time access to both onshore spots, forward, and
NDF market would help in curbing volatility," said Subrat Kumar, general manager-
specialized integrated treasury at Bank of Baroda. “It will also add new non-resident
customers to their fold by offering better pricing and liquidity."
The NDF, nominally a tool for hedging, is also popular with investors who want to bet on the
future direction of a currency without taking deliveries. They’re often used in major financial
centers in place of currencies that don’t trade round-the-clock.
The average daily volume for the rupee in London totaled $47 billion in April 2019,
according to the Bank for International Settlements. That’s a five-fold jump from 2016, and
more than the $34.5 billion of trades executed locally at the time.
Slow Start
“We expect a cautious start with interbank dealing likely taking the lead in terms of
volumes," said B. Prasanna, group head for global markets sales, trading and research at
ICICI Bank Ltd. in Mumbai. “Indian banks can potentially offer competitive pricing using
both onshore and offshore access."
ICICI Bank started trading in the dollar/rupee contracts, dealing with both clients and other
banks in the Singapore market on Monday, the lender said in a statement. With volumes of
$2.3 billion, the dollar/rupee contracts accounted for 15% of trades in the Singapore NDF
market at 2:50 pm, according to data from The Depository Trust & Clearing Corp. The one-
month contract inched down 0.1% to 75.65.
The lenders should have branches in a special hub called the International Finance Services
Center in GIFT City in Gujarat to be eligible to trade in offshore currency markets. Banks are
putting in place documentation to trade with the big global banks and to vie for clients like
hedge funds, asset managers, and large corporates.
Indian regulations currently don’t allow domestic banks to post foreign currency-
denominated collateral with counter-parties overseas. A legal document called a Dollar Credit
Support Annexe is usually a prerequisite to deal with an overseas counter-party, which banks
are putting in place, bankers said.
All trades in NDF markets have to be reported to the Clearing Corp of India platform,
according to the central bank’s rules. “Banks are expected to put in place their own limits for
basis risks of NDF and onshore curve. While banks will offer trading from multiple venues,
we expect that from an economic risk perspective, the risk will likely be managed through the
India branch," ICICI’s Prasanna said.
By allowing the banks to trade in NDFs, RBI is ignoring a recommendation by its own panel,
which had suggested against it citing the potential loss of onshore liquidity, to get a better
regulatory grip on the ballooning volumes.
“We expect a moderate start to trading by Indian banks as enablers are still being put in
place," said Neeraj Gambhir, president and head of treasury and markets at Axis Bank Ltd.
“The full impact will be felt over some time."
My learnings from the news:-
 In June 2020, RBI Governor Shaktikanta Das authorized 12 of the country's financial
institutions to begin trading currency in emerging economies, contrary to its panel 's
suggestion as it would impact onshore liquidity.
 A non-deliverable forward (NDF) agreement is a cash-settled, and typically a short-
term forward deal. They anticipate this move to greatly decrease uncertainty, by
providing competitive pricing and flexibility, attracting new non-resident consumers
to their base.
 In compliance with RBI rules, all transfers in NDF markets must be registered to the
Clearing Corp of India website. IT is expected to start slowly and cautiously but will
have maximum effect in a while.
N2 03062020 Dollar on defensive
The dollar was on the defensive on Tuesday as investors stuck to hopes of a global economic
recovery despite heightened concerns over U.S.-China tensions and mass protests in many
U.S. cities over the death of a black man in police custody.
The U.S. dollar's index against a basket of six major currencies (=USD) stood at its weakest
level since mid-March, at 97.790. The euro fetched $1.11295 (EUR=), little changed so far
on Tuesday but holding near a 2-1/2-month high of $1.1154 touched on Monday.
Sterling traded at $1.2491 (GBP=D4), having hit a one-month high of $1.2506.
U.S. manufacturing activity eased off an 11-year low in May and although the reading was
weaker than forecast, it fit into markets’ expectations that the worst of the economic
downturn was behind as businesses reopen.
“There are some potential flash points such as U.S. demonstrations and China-U.S. tensions.
But, on the whole, the market is still moderately risk-on,” said Kyosuke Suzuki, director of
forex at Societe Generale.
Against the safe-haven yen, the dollar was at 107.57 yen (JPY=), stuck in a well-worn range
between 106 and 108 over the last several weeks. President Donald Trump said on Monday
he was deploying thousands of heavily armed soldiers and law enforcement to halt violence
in the U.S. capital and vowed to do the same in other cities if mayors and governors fail to
regain control of the streets.
The protests erupted over the death of George Floyd, a 46-year-old African-American who
died in Minneapolis police custody after being pinned beneath a white officer’s knee for
nearly nine minutes. Market risk sentiment was hurt only slightly on Monday when
Bloomberg reported that China had told state-owned firms to halt purchases of soybeans and
pork from the United States, raising concerns that the trade deal between the world’s two
biggest economies could be in jeopardy.
The Australian dollar, often seen as a proxy bet on the strength of the Chinese economy,
fetched $0.6794 (AUD=D4), having reached its highest levels since late January. The
Reserve Bank of Australia is expected to keep rates on hold when it meets later on Tuesday.
The Chinese yuan stood flat at 7.1230 per dollar (CNH=EBS) in offshore trade, near its
highest levels in almost two weeks.
My learnings from the news-
 Accordingly, all strains within the US, including the disease outbreak, have had a
detrimental effect on the US dollar as they distort the business danger feeling
contributing to greater instability.
 The DXY dropped in value further to 92,30 and recorded a fall of 6,14 per cent over
the last three months on its own, suggesting that the USD was falling against the
basket currencies.
 The US Dollar Index (DXY) is a statistical weighted sum of a currency exchange
basket against the dollar such as GBP, EUR, JPY, CAD, SEK and CHF and is
perceived to be a fair indicator of the general intensity of the USD.
N3 05062020 USD_CNH bounces from five-week lows
USD/CNH is flashing green in Asia seemingly due to lingering trade tensions. The currency
pair is currently trading at 7.0829, representing a 0.5% gain on the day, having hit a low of
7.0646 on Friday. That level was last observed on April 30.
The offshore Yuan is being offered, possibly in response to comments by a former Chinese
trade official that the dragon nation is unlikely to roll back or reduce tariffs imposed on
lobsters imported from the US. On Friday, President Trump threatened to impose tariffs on
unspecified Chinese products and cars from Europe unless the trading partners reduce their
duties on US lobsters.
Additional upward pressure could be emanating from the broad-based recovery in the US
dollar. The greenback has taken back a majority of its early losses, possibly tracking the
pullback in the S&P 500 futures. At press time, the futures are trading largely unchanged on
the day as opposed to the 0.5% gain seen in early Asia.
Looking forward, USD/CNH could reverse gains, as global equity markets are likely to
remain better bid, keeping the dollar under pressure due to renewed speculation about a V-
shaped economic recovery in the US. Friday's US Nonfarm Payrolls report showed the
economy added 2.5 million jobs in May, pushing the unemployment rate lower to 13.3% and
beating the expected decline of around 8 million by a big margin.
Also, the options market looks to be anticipating a deeper decline in USD/CNH. One-month
risk reversals, a gauge of calls to puts, has declined to a three-month low of 0.162, meaning
the demand for call options or bullish bets is at the weakest since early March. The metric
was hovering at highs above 1.5 about two weeks ago.
 The rising US-China trade tensions as well as China's reluctance to lower import
tariffs on US Lobsters have affected the USD / CNH levels. For these reasons the
USD was appreciating and the CNH depreciating. These gains for USD, however, are
predicted to revert because of the US's impending V-shape rebound.
 This bearish activity is also mirrored in the currency options market, as appetite for
call options was the lowest during early march.
 The currency is holding steady at USD / CNH 6.8632 which is a dramatic drop from
the 7.0829 rate listed in the article suggesting that all the benefit reversal expectations
proved to be true. The currency pair is still appearing to be bearish and is expected to
decline further after the annual Jackson Hole symposium where Fed. Chairman
Jerome Powell will be giving a speech reviewing monetary policy.
N4 06062020 India's forex reserves surge to all-time high of $493.48 billion
The country's foreign exchange reserves surged USD 3.43 billion to a fresh all-time high of
USD 493.48 billion for the week ended May 29 on a handsome accretion of the core currency
assets, the Reserve Bank of India (RBI) said on Friday.
The reserves, which are counted as a key strength as the country faces the economic impact
of the COVID-19 pandemic, had risen by USD 3 billion to an all-time high of USD 490.044
billion in the previous week. During the week ended May 29, foreign currency assets, a major
component of the overall reserves, increased by USD 3.50 billion to USD 455.21 billion, data
from the RBI showed.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or
depreciation of non-US units like the euro, pound and yen held in the foreign exchange
reserves. Total value of the gold reserves continued to decline and were at 32.682 billion,
lower by USD 97 million as compared with the previous week, the central bank said.
In the reporting week, the special drawing rights with the International Monetary Fund (IMF)
were unchanged at USD 1.43 billion, while India's reserve position with the IMF also rose by
USD 31 million to USD 4.16 billion during the reporting week, the data showed.
 Forex Reserves are cash and other capital assets held by the central bank (Reserve
Bank of India) which are generally accessible to the balance of payments of the
nation, monitor the currency exchange rates, maintain trust in the banking markets
and potentially reduce insecurity.
 Growing trends have been reported in India's foreign exchange reserves over the past
few months, from USD 493.48 billion for the week ended 29 May to USD 538.191
billion for 07 August 2020 (as reported in the article). The primary reason for the rise
in forex reserves is recognized as the expansion of investing in Indian stocks and
foreign direct investment (FDI) by international asset managers.
 These growing reserves are a symbol of help of the soviet in times of pandemic, since
they act as a support system in the case of any global downturn and are adequate to
support the country's import bill for one year. This has continued to improve the rupee
against the dollar as well.
N5 06062020 FPIs Invest Rs.18589 Cr
Foreign portfolio investors have pumped in a massive Rs 18,589 crore into the Indian
markets the first week of June as sentiment improved amid graded lifting of lockdown curbs.
Additionally, Reliance Industries NSE 0.26 %' mega rights issue, which closed during the
week and was oversubscribed, and stake sale of 2.8 per cent by Uday Kotak in Kotak
Mahindra Bank NSE 3.32 % attracted significant foreign flows, said Himanshu Srivastava,
associate director-manager research, Morningstar India.
During the first five trading sessions of June, overseas investors put in a net sum of Rs 20,814
crore in equities but pulled out a net Rs 2,225 crore from the debt segment. The total net
investment between June 1-5 stood at Rs 18,589 crore. Prior to this, foreign portfolio
investors (FPIs) were net sellers for three consecutive months. They withdrew Rs 7,366 crore
in May, Rs 15,403 crore in April and a record Rs 1.1 lakh crore in March. Market sentiment
has improved as the Indian government announced an overall Rs 20 lakh crore economic
relief package to tide over the challenges posed by COVID-19 pandemic and the lockdown,
said Bajaj Capital Research.
"The global crude price's spectacular recovery by surging 40 per cent during May and
slowdown in global infection growth helped to revive the risk-on sentiments among the
investors...," it added.
However, Srivastava said the investment environment continues to be grim as almost all
global economies are staring at a recession. The simmering tensions between the US and
China also do not augur well for emerging markets like India, which are more vulnerable
towards geopolitical risks. Though foreign investors have returned to invest in the Indian
equity markets, it needs to sustain to call it a change in trend and not a short-term investment
opportunity, he said. If the situation worsens, foreign investors can again switch back to the
risk-averse mode, he added.
According to Harsh Jain, co-founder and COO of Groww, "there is a sense of optimism in the
markets and a belief that the worst is behind us in terms of market performance." FPIs have
been investing in fundamentally strong blue-chip companies and this trend is likely to
continue in the near future. More money will flow into market leaders. Strong companies are
likely to be able to weather and even take advantage of challenging times, Jain added.
However, he said FPI inflows into India do not depend just on Indian factors and the global
economic scenario also greatly impacts investor sentiment.
"The ongoing tension between US and China, the economic situation in the US, and the
upcoming US elections all are factors that will affect FPI investment in India for the rest of
FY21," he said.
 In the first week of June 2020, Rs 24,053 crore expenditure was raised by FPIs with
Rs 18,589 crore only due to improved market trust as a result of the introduction of
the total Rs 20 lakh crore economic assistance program. Rising oil prices played a role
in this.
 However, this growth was short lived as expected by market observers, as FPIs
themselves became net sellers in July 2020. Rs 9,015 crore is taken out of equity and
debt instruments.
 The reasons for this reversal are seen as the expected rise in the number of corona
virus cases and increased tensions between the United States and China. And all the
global economies go along with this as they tread slowly towards recession due to
which the effects of the FPIs could multifold.
N6 07062020 Dollar is dented as data bolsters hope for economic recovery _

Financial Post
The U.S. dollar fell against the Antipodean currencies and the British pound after surprising
improvement in U.S. labor market data bolstered expectations for economic recovery, which
reduced safe-harbor demand for the greenback.
The Australian and New Zealand dollars both rose to their highest since January after data
showed a smaller-than-expected fall in Chinese exports, which supports commodity
currencies.
In contrast, the U.S. dollar traded near its highest in more than two months against the yen,
supported by recent gains in long-term Treasury yields as investors await the outcome of a
U.S. Federal Reserve meeting. Sentiment has improved dramatically in the currency market
as traders focus on signs of a rebound from the coronavirus outbreak, which has hurt the
dollar and driven money into so-called risk-on trades.
“Commodities and emerging market currencies are clearly finding it easier to rise against the
dollar on hopes of economic recovery, but it is a different story when it comes to the yen,”
said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
“For dollar/yen the focus is more on yields, which is pushing the currency pair higher.”
The Australian dollar rose 0.34% to $0.6993, approaching the highest since Jan. 2. The New
Zealand dollar rose to $0.6533, the highest since Jan. 29. Against the pound, the dollar fell
0.25% to $1.2704 in Asia on Monday, close to its lowest since March 12.
The dollar traded at 109.67 yen, close to a two-month high set on Friday. The U.S. economy
unexpectedly added jobs in May after suffering record losses in the prior month, data on
Friday showed.
The jobless rate also fell to 13.3% last month from a post-World War Two high of 14.7% in
April, offering hope that the world’s largest economy is starting to stabilize after the
pandemic triggered a wave of job cuts. Some investors may avoid making big trades before
the Federal Reserve meeting ending on Wednesday to see how Chairman Jerome Powell
views a recent rise in 10-year Treasury yields and a steepening in the yield curve.
The onshore yuan is in focus after data on Sunday showed exports from China, the world’s
second-largest economy, fell less in May than the market expected.
The pandemic first emerged in China late last year and has caused a sharp contraction in
global economic activity, but many traders are now focused on the pace of recovery in the
second half of this year. Some analysts said there are still many risks to the outlook, including
diplomatic tension between the United States and China, and the U.S. presidential election
later this year. Net short U.S. dollar positioning fell to $8.17 billion in the week ended June 2
from $8.6 billion the previous week, showed U.S. Commodity Futures Trading Commission
data released on Friday, which may discourage some investors from selling the dollar further.
The euro rose to $1.1314 as the common currency continued to ride a wave of optimism after
the European Central Bank said last week it will increase bond purchases to help the bloc’s
weakest economies. Sentiment will face a test later on Monday with the release of data
forecast to show that German industrial output fell the most on record in April.
 The paper discusses how dollars performed against other currencies. The Australian
dollar has risen from 0.34 per cent to $0.6993, near the peak since Jan. 2. In New
Zealand the dollar has risen to $0.6533, the highest since January 29. The dollar
dipped against the pound on Monday to $1,2704 in Asia, near its lowest since March
12, and the currency traded at 109.67 yen
 The factors behind these are the collapse in the US rate of unemployment and the
increasing trust in the rebound that has resulted in growing commodity and
developing currencies in the world economy.
N7 08062020 Dollar slips, commodity currencies gain as risk sentiment
improves – Reuters
NEW YORK (Reuters) - The U.S. dollar fell and commodity currencies gained on Monday,
as risk appetite increased on optimism about recovery from the coronavirus pandemic amid a
blockbuster May U.S. jobs report last Friday. The safe-haven Japanese yen rose against the
dollar, reversing losses the past several days as risk sentiment gained with growing recovery
hopes. “There has been this unwinding of negativity since the last week of May, particularly
negative U.S.-China bets,” said Erik Bregar, head of FX strategy, at Exchange Bank of
Canada in Toronto. Commodity currencies such as the Australian, New Zealand, and
Canadian dollars were well-bid. The New Zealand dollar, for one, climbed to its highest in
four months after New Zealand said it had stopped transmission of the coronavirus within the
country. New Zealand Prime Minister Jacinda Arden on Monday said the country would lift
all virus-containment measures apart from border controls, making it one of the first countries
to do so. But as the United States and economies around the world reopen, there have been
nagging doubts as to where the recovery is headed. “The UK, for instance, plans to reopen
and one of the things to consider is Brexit,” said Juan Perez, currency trader at Tempus Inc in
Washington. “Once we establish that Brexit is one of those 2019 issues that needs to be
resolved, we could see the major rally in the euro come under pressure because the market
may focus once again on what type of partnership Europe would have with the UK,” he
added.
In afternoon trading, the dollar index dipped 0.1% to 96.641 in choppy trading, after having
gained overnight. The dollar fell sharply against the yen, down 1.1% at 108.33. It also
dropped 0.6%against Swiss franc, another safe haven, to 0.9566. The euro was higher against
the dollar despite data showing German industrial output plunged the most on record in April
as the pandemic forced companies in Europe’s largest economy to scale back production. The
euro was last up 0.2% at $1.1303. It reached a three-month high of $1.1384 last week after
the European Central Bank announced it was expanding its stimulus program.
 With the covid pandemic, the currency markets had become highly volatility. But
throughout the pandemic, Yen performed extremely well and became the safe haven
out of all the currencies. Yen has been comparatively more volatile concerning that
the currency’s major driver is untimely monthly Bank of Japan Announcements. The
BoJ took dramatic steps to mitigate the negative impact of Covid 19 through the
Qualitative Monetary Easing (QQE) program entailing short term interest of -0.1%
and longer term 10-year JGB at 0%.
 The New Zealand dollar showed a bullish trend as the country announced itself to be
Covid free. New Zealand tend to become the first country to do so. The tensions
across other countries increased as they reopened their economies. The dollar in
comparison to the greenback countries currencies showed a bearish trend as UK
depended upon the Brexit issues to resolve. The task on hand for the Fed was to show
balance between the hope the economy is past its worst phase due to the pandemic
against the fact that the virus is yet not under control.
 Another safe haven currency, the swiss franc performed well against the US dollar.
The euro skyrocketed notwithstanding the data showing the plunged industrial
production in Europe due to the slowed down economy.
N8 10062020 AUD_USD's recovery from session low stalls after weak

China PPI (1)
AUD/USD's recovery from the session low of 0.6933 looks to have stalled near 0.6960
following the release of the weaker-than-expected China producer price index (PPI).
According to the National Bureau of Statistics, the PPI, which measures costs for goods at the
factory gate, fell 3.7% year-on-year in May versus expectations for a 3.3% decline, having
dropped by 3.1% in April. The deflation in factory-gate prices could be associated with the
slowdown caused by the coronavirus outbreak and the resulting slump in global commodity
prices. A weaker PPI, therefore, is bad news for the commodity-sensitive currency like the
Australian dollar.
The PPI data came along with the release of the consumer price index, which showed
consumer inflation rose 2.4% year-on-year in May, missing the forecast for a 2.7% rise
following April's 3.3% gain.
Apart from the weak PPI, the dismal domestic data seems to have put brakes on AUD's
recovery. The number of Home Loans fell by 4.4% in April, extending the 0.9% drop seen in
March, the data released by the Australian Bureau of Statistics showed. The number indicates
a declining level of consumer confidence in the housing sector and is a bearish development
for the Aussie dollar. Even so, the AUD could rise during the day ahead if the risk assets put
on a good show, erasing Tuesday's decline. At press time, the futures tied to the S&P 500 are
reporting a 0.5% rise.
 Considering the AUD/USD pair’s latest declines, coupled with downbeat expectations
from China’s key inflation data, bulls are less likely to return unless witnessing an
extremely positive outcome. On the contrary, sluggish CPI will add to the pair’s
weakness during the pre-Fed cautious session.
 Technically, the pair’s failure to sustain the upside break of 0.7000 seems to drag it
towards the early-January low near 0.6850 and February month’s high of 0.6775.
However, the 200-day SMA level of 0.6664 might restrict the pair’s additional
downside. On the contrary, a clear break above 0.7000 will have to cross the latest top
near 0.7045 ahead of targeting July 2019 peak surrounding 0.7085.
 Changes in the PPI are widely considered as an indicator of commodity inflation. If
the Producer Price Index increase is excessive, it would indicate that inflation has
become a destabilizing factor in the economy. The People’s Bank of China would
tighten monetary policy and fiscal policy risk. Generally speaking, a high reading is
seen as positive (or bullish) for the CNY, whereas a low reading is seen as negative
(or bearish) for the CNY.
 The purchase power of the CNY is dragged down by inflation. The CPI is a key
indicator to measure inflation and changes in purchasing trends. A substantial
consumer price index increase would indicate that inflation has become a
destabilizing factor in the economy, potentially prompting The People’s Bank of
China to tighten monetary policy and fiscal policy risk. Generally speaking, a high
reading is seen as positive (or bullish) for the CNY, while a low reading is seen as
negative (or Bearish) for the CNY.
 Current Situation: - With the recent US dollar recovery and downbeat prints of
China’s Caixin Manufacturing PMI probing the AUD/USD buyers, inflation numbers
from Australia’s largest customer become the key to watch. The headline inflation
figures from the dragon nation are anticipated to end their deflationary pattern, which
in turn becomes the cause of concern for the Aussie bulls.
N9 10062020 NZD_USD_ Sellers aim for 0.6500 following downbeat China
inflation figures
NZD/USD declines to 0.6510 after China lashed downbeat in nation data for May during
Wednesday’s Asian session. The pair earlier refreshed the intraday high to 0.6519 but failed
to defy the previous day’s weakness amid the pre-Fed cautious sentiment.
China’s Consumer Price Index (CPI) weakened more than 2.7% forecast to 2.4% on a yearly
basis whereas the Producer Price Index (PPI) extended downside to -3.7%, below -3.3%
market consensus. Additionally, the MoM readings of CPI drag it below -0.5% expected to
-0.8%.
Considering the downbeat [gures from the key customer, NZD/USD drops after the data.
However, the pair’s weakness remains tepid amid the market’s inactivity ahead of the key US
Federal Reserve monetary policy meeting decision. It should also be noted that the market’s
risk-tone sentiment also weighs down amid a minor noise between the US and China. While
portraying the same, US Secretary of State Mike Pompeo alleged China of using coercion to
push the UK towards opening the door for Huawei.
Against this backdrop, the US 10-year Treasury yields seesaw around 0.8300 while Japan’s
Nikkei marks 0.10% losses to 23, 068 by the press time. Looking forward, traders will keep
waiting for the announcements from the Federal Open Market Committee (FOMC).
However, the US in;ation numbers for May and the US-China tussle might offer intermediate
clues to the pair watchers. Analysts as Westpac also give high priority to the Fed meeting
while saying, “the major event of the day will be the FOMC’s June monetary policy meeting.
Having had great success buoying sentiment thus far, the Fed will keep rates on hold (4:00
am Thu Syd). Following the policy announcement, Chair Powell will deliver the post-
meeting press conference (4:30 am). There will be considerable interest in the “dots” of
FOMC members’ interest rate projections, which have not been published since December
2019 and on any discussion of measures such as yield curve control.”
Technical analysis
Buyers are looking for a clear break above 0.6580 level comprising the recent high and mid-
January lows. If that happens, January 16 top surrounding 0.6665/70 could return to the
charts. Meanwhile, overbought RSI conditions on the daily chart and the pair’s failure to rise
beyond 0.6580 drags the kiwi pair towards March month high near 0.6450 during the further
declines.
 Following a pessimistic trend in China's PPI & CPI inflation forecasts, NZD / USD
takes a U-turn from the intraday high of 0.6519 after China's CPI and PPI data for
May.
 Financial markets are less interested in the run-up to the monetary policy meeting of
the US Federal Reserve although there is uncertainty over the Fed 's decisions.
 It should also be noted that the market is highly competitive and turbulent, as tensions
between the US and China are growing, and the policy of the Federal Bank is also to
be unveiled soon leading to a lack of business action.
 Current condition- The latest average NZD / USD is 0.67 meaning the situation has
improved
N10 11062020 Fed Reserve Press Release
The Federal Reserve is committed to using its full range of tools to support the U.S. economy
in this challenging time, thereby promoting its maximum employment and price stability
goals. The coronavirus outbreak is causing tremendous human and economic hardship across
the United States and around the world. The virus and the measures taken to protect public
health have induced sharp declines in economic activity and a surge in job losses. Weaker
demand and significantly lower oil prices are holding down consumer price inflation.
Financial conditions have improved, in part reflecting policy measures to support the
economy and the flow of credit to U.S. households and businesses. The ongoing public health
crisis will weigh heavily on economic activity, employment, and inflation in the near term,
and poses considerable risks to the economic outlook over the medium term. In light of these
developments, the Committee decided to maintain the target range for the federal funds rate
at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident
that the economy has weathered recent events and is on track to achieve its maximum
employment and price stability goals. The Committee will continue to monitor the
implications of incoming information for the economic outlook, including information related
to public health, as well as global developments and muted inflation pressures, and will use
its tools and act as appropriate to support the economy. In determining the timing and size of
future adjustments to the stance of monetary policy, the Committee will assess realized and
expected economic conditions relative to its maximum employment objective and its
symmetric 2 percent inflation objective. This assessment will take into account a wide range
of information, including measures of labor market conditions, indicators of inflation
pressures and inflation expectations, and readings on financial and international
developments.
To support the flow of credit to households and businesses, over coming months the Federal
Reserve will increase its holdings of Treasury securities and agency residential and
commercial mortgage-backed securities at least at the current pace to sustain smooth market
functioning, thereby fostering effective transmission of monetary policy to broader financial
conditions. In addition, the Open Market Desk will continue to offer large-scale overnight
and term repurchase agreement operations. The Committee will closely monitor
developments and is prepared to adjust its plans as appropriate. Voting for the monetary
policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W.
Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel
Kashkari; Loretta J. Mester; and Randal K. Quarles.
Decisions Regarding Monetary Policy Implementation
The Federal Reserve has made the following decisions to implement the monetary policy
stance announced by the Federal Open Market Committee in its statement on June 10, 2020:
• The Board of Governors of the Federal Reserve System voted unanimously to maintain the
interest rate paid on required and excess reserve balances at 0.10 percent, effective June 11,
2020.
• As part of its policy decision, the Federal Open Market Committee voted to authorize and
direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed
otherwise, to execute transactions in the System Open Market Account in accordance with
the following domestic policy directive:
“Effective June 11, 2020, the Federal Open Market Committee directs the Desk to:
o Undertake open market operations as necessary to maintain the federal funds rate in a target
range of 0 to 1/4 percent. o Increase the System Open Market Account holdings of Treasury
securities, agency mortgage-backed securities (MBS), and agency commercial mortgage-
backed securities (CMBS) at least at the current pace to sustain smooth functioning of
markets for these securities, thereby fostering effective transmission of monetary policy to
broader financial conditions.
o Conduct term and overnight repurchase agreement operations to support effective policy
implementation and the smooth functioning of short-term U.S. dollar funding markets.
o Conduct overnight reverse repurchase agreement operations at an offering rate of 0.00

percent and with a per-counterparty limit of $30 billion per day; the per-counterparty limit
can be temporarily increased at the discretion of the Chair.
o Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury
securities and reinvest all principal payments from the Federal Reserve's holdings of agency
debt and agency MBS in agency MBS and all principal payments from holdings of agency
CMBS in agency CMBS.
o Allow modest deviations from stated amounts for purchases and reinvestments, if needed
for operational reasons.
o Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of
the Federal Reserve's agency MBS transactions.”
 Because of the pandemic situation the US is facing heath and economic problems.
There has been a significant increase in unemployment and a collapse in the
economy's inflation rates.
 In order to supply the market with a product, the Federal Reserve sought to raise the
inflation rate by 2 per cent. In the world too, the kit would be inserted to reduce the
unemployment rate.
 Current situation: since 3 March, the Fed has lowered its target for federal funds, with
the rate banks charge each other to borrow overnight, by a total of 1.5 percentage
points, down to 0.25 per cent. The federal funds rate is a benchmark for other short-
term rates, and also affects longer-term rates, so this move helps lower the borrowing
costs on mortgages, auto loans, home equity loans, and other loans, so it will also
decrease the interest gain that savers get.
N11 11062020 U.S. Dollar Falls to Multi-Month Lows as Fed Signals No
Hikes Through 2022 _ Investing.com
Investors drove U.S. dollars to fresh lows after the Federal Reserve made it clear that zero
interest rates are here to stay, at least for the next year and a half. According to the updated
dot plot of interest rate projections in June, U.S. policy-makers do not see a rate hike before
the end of 2022. They also felt that continued purchases of Treasury- and mortgage-backed
securities “at least at the current place” is necessary, leaving the door open to further bond
purchases.
The prospect of cheap and easy money for another 18 months is negative for the U.S. dollar
because it eliminates the hope for any meaningful increase in yields and discourages safe-
haven trades. A central bank’s reluctance to rate hikes hurts the market in a backdrop of
deteriorating growth, but when markets and economies are in recovery mode like now,
keeping interest rates low to support a stronger recovery encourages risk-taking. For all these
reasons, the , , the , and
dollars climbed to multi-month highs versus the greenback. The biggest beneficiary was the
Australian dollar, which rose more than 1% to its strongest level since July 2019. EUR/USD
broke through 1.14 to a nearly 3-month high.
The need for accommodative policy was made clear in the Fed’s view that the virus poses
considerable risks and, in Fed Chairman Jerome Powell’s comment today, the central bank is
not even thinking about raising interest rates. The May jobs report was good, but the BLS
jobless rate likely understates unemployment and it's not clear if the labor market hit a bottom
in May, according to Powell. Nonetheless, he sees a second-half recovery that is supported by
zero-interest rates. Full recovery, however, is “unlikely to occur until people feel safe.” As a
result, they will keep using emergency lending powers forcefully and adjust bond-buying as
needed. It needs to continue buying bonds and keep interest rates at zero because there’s a lot
of “work to be done” to get 22 million to 24 million back to work, and millions may be out of
work for some time. The next few months will be “important in judging the real story,” but
it's clear from the Fed’s economic projections and Powell’s cautiously optimistic tone that the
central bank’s work has gone from preventing a depression to encouraging a recovery, which
is good news for the U.S. economy.
Here are the main takeaways from the Fed announcement:

 Buying bonds “at least at current pace”
 Sees rates at zero through 2022
 No negative rate dots
 Expects 9.3% unemployment rate end of 2020, 6.5% end of 2021 + Sees GDP falling
6.5% in 2020, rising 5% in 2021
pulled back post FOMC, but with further improvements expected in U.S. data, the losses
should be limited.
Can risk trades carry on? Based on today’s FOMC, the answer is yes, but the overextended
moves in currency pairs, such as EUR/USD, AUD/USD, NZD/USD and begs for a
correction. For the past few weeks, investors have been driving currencies and equities higher
on the premise that the worst is over and Powell’s comments along with the FOMC
projections suggests that the central bank shares these views.
 After the US economy's health index is depleting the USD is showing a bearish
pattern and all the other five main currencies, namely euro, sterling, the dollars from
Australia, Canada and New Zealand are showing positive trends.
 Investors are marinating a downbeat for USD as Jerome Powell's Fed Chairman has
already confirmed that for at least one and a half years the interest rate will be zero
percent as it would continue to boost the unemployment rate which has already led to
a decline of USD.
 Because of the drop in the inflation rate, the USD has sunk to a new low and to boost
this very situation, Fed has begun to deliver a bundle in order to raise the buying
power resulting in a rise in demand of products which will lead to a ride in inflation
rate.
 Stock Markets have started to show a rise in the indices as there is a positive
sentiment in the US economy with the release of package.
N12 12062020 Safe-haven currencies gain on worries of lingering economic

pain By Reuters
TOKYO (Reuters) - The safe-haven Swiss franc and the yen held on to gains on Friday while
the U.S. dollar also held firm against riskier currencies after global stock prices tumbled on
renewed doubts over the prospects of a quick recovery in the global economy. Doubts over
the economy stemmed in part from the U.S. Federal Reserve's dire economic assessment as
well as fears over new coronavirus infections, though some analysts said a stock market
correction was inevitable after a rally. The Swiss franc rose to 0.94395 per dollar, having hit
a three-month high of 0.9376 on Thursday. The franc has recovered its lost ground against
the euro over the past two weeks to trade at 1.0665 to the euro (RURCHF=).
The yen also rose to 106.79 yen per dollar. It hit a one-month high of 106.58 on Thursday,
having gained 3.1% from a 2-1/2-month low hit just a week ago. Following its two-day
meeting, the Fed signalled on Wednesday it plans years of extraordinary support for the U.S.
economy, which policymakers project will shrink by 6.5% in 2020, with the unemployment
rate at 9.3%. Although that appears to have triggered selling in shares, analysts have said Fed
officials have been cautious all along, especially compared to the bullish mood in financial
markets until earlier this year.
"It is almost mudslinging to blame the stock falls on the Fed's dour assessment. Most market
players have acknowledged that the stock rally has been driven by excess liquidity and the
Fed's accommodative stance is unlikely to push stocks lower," said Makoto Noji, chief
currency strategist at SMBC Nikko Securities.
"In short, it was a correction from an overbought market, which should not last long. But
what we should be careful is that the market's fall could continue if we have more bad news
from China and Europe for instance."
The tensions between the United States and China have shown limited signs of abating while
Europe is facing tough negotiations next week on its recovery fund plan. Investors were also
worried about new coronavirus infections as the world gradually reopened following
shutdowns aimed at curbing the spread of the disease. In the United States, new infections are
rising slightly after five weeks of declines, according to a Reuters analysis. Part of the
increase is due to more testing, which hit a record high on June 5 of 545,690 tests in a single
day but has since fallen. The dollar held firmer against risk sensitive currencies. The euro
stood at $1.1299 (EUR=), off Wednesday's three-month high of $1.14225. Similarly, the
British pound slipped to $1.2582 from Wednesday's high of $1.2812. The Australian dollar
tumbled to $0.6838, having fallen 2% in the previous session, the biggest daily fall since the
market turmoil of March. The Mexican peso lost 3.8% and dipped further in Asia to 22.85 to
the dollar.
 The U.S. dollar rose against both the Japanese yen and Swiss franc safe haven on
Friday as Wall Street markets rallied off their worst one-day losses in three months,
while the euro plummeted against the greenback and lost early gains.
 The prospects of a post-COVID economic expansion, the reduction of U.S.-China
trade tensions and the possibility of limited high-term yields in the U.S. had weighed
on the dollar, driving it down on many of these world economies, until it improved.
 The British pound deteriorated from reports showing the UK economy dwindled by a
record 20.4 per cent in April as the country invested the month in a deep coronavirus
lockout. Buyers viewed the number as theoretically the bottom of the collapse during
what was expected to be a lengthy and steady rebound.
 In the coming week, markets are planning for a variety of crucial developments that
could affect currencies, including talks on the stabilization fund of the European
Union, Brexit negotiations, the Bank of England and the Swedish Central Bank.
N13 15062020 US Dollar Index tests daily highs beyond the 97.00 mark
The index is extending the rebound from recent multi-month lows in sub96.00 levels and is
posting gains for the third consecutive session on Monday, always on the back of the
improved sentiment surrounding the buck. The better tone in the dollar in past sessions came
after investors reassessed the negative economic view of the Federal Reserve at its on
Wednesday along with fears of a second wave of the coronavirus. Therefore, DXY managed
to reverse somewhat the sharp decline recorded in late May/early June. Moving forward, the
NY Empire State Index will give a hint of how the regional manufacturing sector fared in this
month. In addition, TIC Flows are due along with Net Capital Flows and the speech by San
Francisco Fed M. Daly (2021 voter, centrist).
What to look for around USD
The index keeps improving on Monday amidst renewed concerns over a probable second
wave of coronavirus contagion while the gloomy view on the economy from the Fed last
week also collaborated with the pick-up in the buying interest in the buck as of late. Other
than that, and as usual in past weeks, price action around DXY is expected to track the
performance of the broad risk appetite trends, US-China trade developments and the progress
on the re-opening of the economy. On the constructive stance around the buck, bouts of risk
aversion should support the investors’ preference for the greenback as a safe haven along
with its status of global reserve currency and store of value.
US Dollar Index relevant levels
At the moment, the index is gaining 0.19% at 97.27 and a breakout of 97.87 (61.8% Fibo of
the 2017-2018 drop) would aim for 98.42 (200-day SMA) and Znally 98.97 (100-day SMA).
On the downside, immediate contention emerges at 95.72 (monthly low Jun.10) followed by
95.03 (2019 low Jan.10) and then 94.65 (2020 low Mar.9).
 There was no one clear catalyst for the decline in stocks, but a combination of factors
such as the massive protests in the USA and the increased risks of a second wave of
COVID-19 quelled investors’ optimism.
 The US dollar rose last week, while global and US stock indices fell, completely
compensating the growth of the previous week.
 Donald Trump criticized the Fed for gloomy forecasts made after the last meeting of
the central bank, and said that it expects a successful second half of the year.
Evidence suggests that economic recovery after a pandemic will be slow and uneven.
There is a threat of a second wave of morbidity, which may further cloud economic
prospects.
N14 16062020 When is the BOJ rate decision and how could it affect USD
Early on Tuesday, around 03:00 AM GMT, the Bank of Japan (BOJ) will provide the
decision of its routine monetary policy meeting. The central bank is widely expected to offer
no change to its present monetary policy after the latest action in the emergency meeting. In
doing so, the BOJ will keep the short-term interest rate target at -0.1% and directing 10-year
government bond yields toward zero.
Though, the meeting becomes important for the USD/JPY traders following the central
bank’s latest readiness to help private institutions. Other than the BOJ action, Governor
Haruhiko Kuroda’s speech at 06:00 GMT will also become the key for the yen pair.
On Monday, Bloomberg spread expectations, based on a survey of economists, suggesting

that the BOJ will increase the size of its loan program linked to government lending. As a
result, a surprise announcement to flaunt the readiness to propel money markets by the
Japanese central bank can’t be ruled out.
How could it affect USD/JPY?
USD/JPY holds onto recovery gains from 107.23 to 107.38 by the press time of early
Tuesday. The pair have recently cheered the market’s optimism but cautious sentiment ahead
of the BOJ seems to guard the immediate upside. Although the BOJ is less likely to offer any
major moves to the pair, a surprise announcement or a downbeat statement conveying
economic risks could propel the pair’s further upside. However, the fears of the coronavirus
(COVID-19) outbreak 2.0 and any positive comments from BOJ Governor Kuroda might
question the pair’s near-term advances.
Technically, a confluence of 21 and 50-day EMA around 107.80 probes the pair’s immediate
upside ahead of a 200-day EMA level of 108.35. On the contrary, an ascending trend line
from March 16, around 106.65 now, restricts the pair’s immediate downside.
BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is
hawkish about the inflationary outlook of the economy and rises the interest rates it is
positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese
economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.
 The bank is expected to leave interest rates at -0.10 per cent unchanged. By this, the
10-year government bond yields will continue to be led at about zero.
 Participants now foresee a 4.7% downturn in the economy this year and a 0.7% rise in
price inflation.
 Today's status quo policy statement will only reinforce the will gap in monetary
policy and certainly drive the USD / JPY higher.
N15 17062020 IMF mulls strategy to give needy nations SDR access
NEW DELHI NEW DELHI : After India, the US and other countries opposed an
International Monetary Fund (IMF) proposal to issue fresh special drawing rights (SDR)
currencies to help countries deal with the economic fallout of the coronavirus pandemic, the
multilateral lender is thinking of redistributing existing unused SDRs of rich member-
countries to low-income countries in desperate need. IMF chief economist Gita Gopinath said
the SDR allocation issue is being discussed and that there is no consensus on it at this point.
“Let’s be clear what the SDR can do. When you do a general SDR or increase SDR
allocations, most of it goes to the countries that don’t need it. Because it is proportional to
your quota, it goes to the very large economies. It does not go to the low-income countries in
very large numbers," she said at a webinar organized by the Princeton Bendheim Centre for
Finance. Gopinath said the IMF is discussing an alternative mechanism with its members
under which wealthy countries that don’t need their SDRs can lend them to low-income
countries. “There is certainly a lot of appetite for this second strategy and that’s something
we are working on," she added.
SDR is an international reserve asset comprising the dollar, euro, yen, sterling and yuan, and
allocated to IMF members according to their quota. India has 13,114 million SDRs on
account of its 2.76% quota while the US has 82,994 million SDRs due to its 17.45% quota.
China with 6.41% quota has 30,483 million SDRs at the IMF. On 8 June, one SDR was
valued at $1.38.
A rush to safety by investors has triggered an outflow of capital from many least developed
and developing economies, many of whom have seen their fiscal space reduced by the virtual
standstill of economic activity, preventing them from being able to import essential medical
supplies. UN secretary general Antonio Guterres on 28 May called for debt relief for all
developing and middle-income countries amid the coronavirus pandemic and urged the IMF
to consider boosting global liquidity by issuing a new allocation of its SDR currency.
“Existing mechanisms are stretched to capacity, and resources of the International Monetary
Fund may not be enough. We have the tools to enhance global liquidity; I urge you to use
them, and especially to consider a new issuance of Special Drawing Rights," he said.
Opposing the plan to issue $500 billion of fresh SDRs at a G-20 virtual meeting on 31 March,
finance minister Nirmala Sitharaman said national forex reserves should be the first line of
defence during a crisis like this. “India sounded a note of caution on the proposed new
allocation of SDRs of $500 billion, saying that in the current context of illiquidity and flights
to cash, the efficacy of an SDR allocation was not certain. Observing that in the absence of a
global safety net, countries rely on national reserves as the first line of defence against market
turmoil and confidence crises and, consequently, extraneous demands for these reserves, not
related to domestic monetary and financial stability, would be costly. It was stated that India
did not support new allocation of SDRs," the finance ministry said in a report published on 15
May.
 The project comes after India, the US and other countries rejected the International
Monetary Fund (IMF) initiative to grant separate Special Drawing Rights (SDR)
currencies to help countries resolve the economic implications of the coronavirus
pandemic;
 As SDR allocations rise, the majority goes to countries that don't need them. As it is
equal to the amount of the nation's quota in question, it goes more to big economies
and not to countries with low wages.
 Investors' sprint to safety has sparked a capital outflow from both least developed and
emerging economies. Several of those countries have seen their fiscal room limited by
virtual economic slowdown, which is also preventing them from being able to import
essential medical supplies.
N16 18062020 Dollar holds advantage as anxiety grows over rise in

coronavirus cases By Reuters
TOKYO (Reuters) - The dollar held onto gains on Thursday as growing concerns about a rise
in coronavirus cases underpinned safe-haven demand for the U.S. currency. The British
pound traded in a narrow range before a Bank of England meeting where policymakers are
expected to expand quantitative easing in the face of a stuttering economy and rocky trade
negotiations with the European Union. A surge in new coronavirus infections in several U.S.
states and the imposition of travel curbs in Beijing to stop a separate outbreak have served as
a reminder that the pandemic could be a severe drag on the global economy for a protracted
period. "Upside for U.S. stocks and other risk assets has dwindled because more people are
talking about a second wave of virus infections," said Junichi Ishikawa, senior foreign
exchange strategist at IG Securities in Tokyo. "This supports the dollar and the yen because
they are both safe havens. The pound has its own problems. The British economy is not in
good shape and a hard Brexit remains a risk."
The dollar traded at $1.1240 per euro on Thursday in Asia following a 0.2% gain in the
previous session. The greenback bought 0.9489 Swiss franc, holding onto a 0.3% gain on
Wednesday. The yen edged up to 106.81 against the dollar. Sterling inched down to $1.2547,
on course for a third day of losses. Against the euro, the pound was little changed at 89.60
pence. A spike in new coronavirus infections and hospitalisations in several parts of the
United States over the last two weeks points to a troubling trend because cases had been
falling for more than a month. China's capital has cancelled scores of flights and blocked off
some neighbourhoods to contain a coronavirus outbreak that has fanned fears of wider
contagion.
The situation in both the United States and China has raised fresh concerns about the risks of
re-opening economic activity before a vaccine has been developed. The Australian dollar
traded at $0.6878, extending a pull back from a one-year high reached last week. Many
traders in the kept to the side-lines before the release of Australian jobs data later on
Thursday. Across the Tasman Sea, the New Zealand dollar eased slightly to $0.6449 after
data showed the economy shrank more than expected in the first quarter. The British pound
got off to a quiet start in Asia but will come into focus later in the day as traders brace for the
Bank of England's policy meeting.
The BOE is expected to boost its quantitative easing programme by 100 billion pounds ($125
billion), with some analysts eyeing an even larger increase amid concerns about the economic
outlook. Britain is seeking a free trade agreement with the EU, which it left on Jan. 31, but
negotiators have so far made little progress, raising the risk both sides will fail to agree a deal
before a deadline at the end of the year.
 In recent weeks, the dollar has improved as markets battled with concerns about effect
of the COVID-19 pandemic on industrial prosperity.
 Many foreign commercial banks hold the U.S. dollar in deposits and a significant
proportion of financial trades are conducted using the U.S. money, thus the dollar is
expected to stay preferred by investors who are eager to maintain their money for
now.
 The euro, the biggest and most volatile currency pair, is expected to make up half of
the 3.5 percent losses it suffered this year and benefit a further 2.0 percent from about
$1.14 in 12 months' trading.
N17 19062020 Forex - Euro, Sterling Drift Ahead of ECB, BoE News By
Investing.com
Investing.com - The dollar edged lower in early European trade Thursday, ahead of two
major monetary developments in Europe. The European Central Bank will announce the
results of its latest long-term lending operation, which is the first at which banks can borrow
at the new lower limit of as low as 1%. Given the doubts over the effectiveness of negative
interest rates, a high take-up would constitute a vote of confidence in the ability of the ECB
to keep supporting the economy through monetary policy (and vice versa). ECB board
member Isabel Schnabel last week trailed expectations of around 1.4 trillion euros in demand.
The TLTRO results will be followed by the Bank of England's policy announcement at 7 AM
ET (1100 GMT).
Sterling edged lower in early trading Thursday, amid expectations that the central bank will
boost its quantitative easing program by between 100 and 150 billion pounds. The U.K.
economy has been particularly hard hit by the coronavirus outbreak, and is forecast to shrink
the most of all G7 economies this year by the Organization for Economic Cooperation and
Development. “Our economist thinks the QE target will be raised by 150 billion [pounds]
compared to consensus of only 100 billion [pounds],” said analysts at ING, in a research note.
“Our expectation is driven in part by practical consideration. If purchases continue at the
current pace, the target will be reached around the September meeting - leaving the MPC in a
position to take a rushed decision after the summer.”
GBP/USD dropped 0.1% to 1.2538, while EUR/GBP rose 0.2% to 0.8974.

At 3:40 AM ET (0740 GMT), the dollar Index, which tracks the greenback against a basket
of six other currencies, was down 0.1% at 97.013. EUR/USD gained 0.1% to 1.1251,
USD/JPY dropped 0.1% to 106.86, while the risk-sensitive AUD/USD fell 0.2% to 0.6867.
Norway's central bank is also scheduled to meet later Thursday, and is widely expected to
keep its benchmark interest rates unchanged at 0.0%. “Developments since the May meeting
have clearly come out on the upside and at the very least the downside risk is much reduced,”
said analysts at Danske Bank, in a research note. “We therefore expect Norges Bank to revise
its projections upwards and that the accompanying interest rate path will indicate a gradual
rise in the policy rates from the end of 2022.”
USD/NOK rose 0.1% to 9.5286 and EUR/NOK rose 0.1% to 10.722.
The central bank operations are taking place against a backdrop of a spike in new
Coronavirus cases in the U.S. and China, which has hit risk-sensitive currencies this week.
“The markets are currently weighing two opposing forces for risk assets. The rise in Covid-
19 cases in the US and China and its associated risk for the economies, and stimulus
measures (both monetary and prospects of further fiscal),” ING analysts said. As such, the
latest weekly U.S. jobless claims at 8:30 AM ET (1230 GMT) may play a big role in whether
greed or fear sets the tone for the rest of the day.
 Fluctuating Euro trends were highly impacted as the dollar hit a low score in the
European trade market. The European central bank lowered the rates on the targeted
longer-term refinancing operation (TLTROs) putting them at 50 basis points lower
than the average rate of reference which stood at zero. The bank also announced the
launch of seven non-targeted Pandemic emergency longer-term refinancing operations
(PELTROs) placed at a higher rate of 25 basis points above the average reference
point. The anticipatory results caused the gush of low hit on the Dollar.
 The sterling fell sharply due to the hard-hit economy of UK. The economy, one
among the G7 economies is expected to have been hit hard by the covid pandemic and
to shrink the most as compared to others. The Bank of England boosted the UK
economy by injected an additional sum of 100 billion pound as a means of investment
in asset purchases. The fall in the GDP is expected to have reduced the quarter as UK
takes steps to emerge from the lockdown.
 During the same time, the dollar rose and the commodity currencies fell as a
sentiment of risk aversion dominated the markets as there was an era of uncertainty
and high volatility, driven by the fear of the second wave of covid infections. The
strengthening of dollar against the other currencies in the basket of currencies was
considered as a product of its recent weakening rather than the fear of the second
wave or the fear of new infections.
N18 22062020 India’s current account may turn surplus on coronavirus,

Barclays says
Barclays current-account tracker points to a small deficit of $3 billion in 1Q 2020, followed

by successive 'unwelcome' surpluses, mirroring subdued economic activity Exports shrank
60% from a year earlier, while imports declined 59%, helping narrow the the trade gap to
$6.76 billion from $9.8 billion in March.
NEW DELHI NEW DELHI: India is on course for a rare current-account surplus as the
coronavirus pandemic roils demand for imports, according to Barclays Plc. The bank’s
current-account tracker points to a small deficit of $3 billion in 1Q 2020, followed by
successive “unwelcome" surpluses, mirroring subdued economic activity, analysts led by
Rahul Bajoria, its Mumbai-based senior economist, wrote in a note. “While low oil prices are
serving as a tailwind for the economy, we think the bigger impact on the current account
balance will come from reduced demand for both oil and non-oil imports," wrote Bajoria and
Shreya Sodhani. India’s trade plunged in April as a nationwide lockdown to contain
coronavirus ravaged supply chains and brought domestic demand to a halt in Asia’s third-
largest economy. Exports shrank 60% from a year earlier, while imports declined 59%,
helping narrow the the trade gap to $6.76 billion from $9.8 billion in March, according to
government data. India’s imports have contracted in 10 of the past 12 months amid a
protracted slowdown even before the virus outbreak. The trend has prompted Barclays to
raise its current-account surplus forecast to $19.6 billion, or 0.7% of GDP, for the year to
March from $10 billion previously. India reported a current account deficit of $1.4 billion in
the December quarter.

 India’s current account actual balance as on June stood at a surplus after a long
draught period of 12 years. The last time the current account showed this surplus was
in the March Quarter of 2006-07 at an approximate amount of $4.2 billion. The
current account stepped into 2020 with a minimal deficit of $3 billion, which was
followed by the hostile surpluses due to halt in demand for domestic products and
services in one of the largest economies. The trade gap narrowed down due to the fall
in the exports by 60% as compared to the previous year and the imports by 50%.
 The Macroeconomic report in May suggested that India relies on a contented BoP
with a practicable current account deficit (CAD) and healthy availability of foreign
exchange reserves enough to finance a year of just imports. This was suggested by the
sharp fall in trade deficit of $9.9 billion against the shooting $30.7 billion deficit just a
year ago. As a result, Barclays predicted a raise in current account to $19.6 billion, or
an almost 1% of GDP.
 The sluggishness in the imports and the exports growth can be also due to the high
dependence of India on Oil prices. The reduction in oil consumption (almost 55% of
last years average) pulled down the production of oil by 50%.
 Road ahead- The forecasted BoP remained at a surplus of $32-34 billion for FY2021,
attributable to flimsy export growths and the lethargic growth of Imports amidst the
lockdown and a very meek domestic demand.
N19 23062020 Pound Canadian Dollar (GBP_CAD) Exchange Rate Rises

as Hopes for Easing UK Social Distancing Rules Grow » Future Currency
Forecast
The Pound to Canadian Dollar (GBP/CAD) exchange rate edged higher today, with the
pairing currently up by 0.4% and trading around CA$1.68. Sterling has benefited from rising
hopes that Prime Minister Boris Johnson could relax social distancing guidelines tomorrow.
As a result, GBP traders are becoming more optimistic that the UK economy could be on the
road to recovery. However, today saw the UK factory orders fall to their worst quarter on
record in the three-months of nationwide coronavirus lockdown. Consequently, some Sterling
investors are becoming worried about the industrial sector’s ability to recover from the
Covid-19 crisis.
Anna Leach, CBI Deputy Chief Economist, was however optimistic about the UK’s
economic recovery, saying: ‘The Government has already undertaken a huge amount of work
to provide financial lifelines to businesses throughout this unprecedented period. With firms
having been encouraged to restart operations, the Government must continue to engage with
the sector to understand their specific concerns and provide support as needed.’
Canadian Dollar (CAD) Sinks Despite Bank of Canada Ruling Out Negative Interest
Rates
The Canadian Dollar (CAD) failed to rise against the Pound today despite the Bank of
Canada (BoC) quelling talks of sub-zero interest rates. Consequently, ‘Loonie’ investors are
beginning to lighten up about Canada’s economic recovery in the coming months.
Andrew Kelvin, chief Canada strategist at TD Securities, commented: ‘The Bank of Canada
has done a better job than some other central banks of quashing speculation around further
rate cuts.’
‘If you think that the economy did hit bottom in April, a rate hike in two years … is a
plausible outcome I think.’
However, the ‘Loonie’ has continued to benefit from other assets today, despite growing
fears of a possible second wave of Covid-19 cases in Europe. Furthermore, oil-prices have
dipped on Monday, dampening hopes in one of Canada’s major exports. Any further slippage
in oil prices would prove CAD-negative. The Canadian Dollar (CAD) has benefited from
China’s confirmation that it would continue to engage with the US-China phase one trade
agreement. As a result, the risk sensitive ‘Loonie’ has benefited from signs that tensions
between the world’s two largest economies could be easing.
GPB/CAD Outlook: Could Sterling Rise Higher as Social Distancing Guidelines are
Relaxed?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK’s Markit
Services PMI for June. Any signs of improvement in the UK’s largest sector would prove
GBP-positive. Tomorrow will also see the release of the UK Manufacturing PMI for June. If
this rises out of contraction territory, we could see the Pound benefit. The Canadian Dollar
(CAD) will continue to be driven by oil-prices this week. A sudden dip in oil prices could
drag down the ‘Loonie’ as concerns over the nation’s largest export weigh on the Canadian
currency. The GBP/CAD exchange rate could edge higher tomorrow as Downing Street is
expected to announce relaxations of the social distancing guidelines. As a result, Sterling
could edge higher as hopes for the British economic recovery improve.
 Around the time of June 2020, the lockdown that was previously implemented under
the fear and chaos spread across by the Covid Pandemic was liberalised and some
relaxation was brought about in the social distancing guidelines. This led to a rise in
hope of economic recovery of the country.
 The UK market Services PMI released on 23rd June was much awaited and forecasted
to be at 40 points. The result of which there were anticipatory gains to be expected out
of pound sterling if the PMI rose above the contraction level. But to everyone’s
dismay, the actual PMI stood at a very low percentage of 29 points.
 The Euro remained within the ranges in the month of May while in June, it certainly
took the main stage. This was due to the expectant increase in the Pandemic
Emergency Purchase Plan by an approximate amount of 400 billion Euros. In spite of
the sub-zero interest rates, the CAD failed to show a rise since 11% of the Canadian
GDP comes from the oil industry. And the oil prices saw a continuous dip since May.
As suggested by the publisher of the article, the sudden dip in oil prices may create a
“loonie” in CAD currency price rise.
N20 24062020 Indian rupee surges 17 paise to 76.03 against US dollar -

Moneycontrol.com
The rupee on Monday appreciated 17 paise to close at 76.03 (provisional) against the US
dollar in line with positive equity markets amid sustained foreign fund inflows. Besides, a
weak US dollar against major global currencies also aided the rupee's upward movement,
forex dealers said. At the interbank foreign exchange market, the rupee opened strong at
76.16 and it further rushed to touch a high of 75.98 during the trade. The domestic currency
finally settled at 76.03 against the US dollar, registering a rise of 17 paise over its previous
close of 76.20. On the equities front, the 30-share BSE benchmark Sensex was trading 442.58
points higher at 35,174.31 and broader Nifty rose 123.10 points to 10,367.50. Foreign
institutional investors were net buyers in the capital market, as they bought equity shares
worth Rs 1,237 crore in the previous trading session on Friday, according to provisional
exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies,
fell 0.31 percent to 97.31. Brent crude futures, the global oil benchmark, rose 0.21 percent to
USD 42.28 per barrel.
 Bulls overpower the bears as Indian rupee reveals a weakening trend against the
dollars, i.e. after good initiative rupee leaps 0.17 paise, with a lowest of 75.98, as
these bears overlapped the bulls before.
 Furthermore, the INR has strengthened thanks to foreign currency inflows, apart from
the USD facing a major issue on the forex market as USD, the basic differences
between savings and current account have been affected.
 The rise in black gold futures even affected greenback, as they have a negative
correlation.
N21 25062020 Explained_ Why India’s forex reserves are rising, what this
means for the economy _ Explained News, The Indian Express
India’s forex reserves crossed $500 billion for the first time ever in the week ended June 5,
2020. Unlike in 1991, when India had to pledge its gold reserves to stave off a major
financial crisis, the country can now depend on its soaring foreign exchange reserves to
tackle any crisis on the economic front. While the situation is gloomy on the economic front
with GDP set to contract for the first time in 40 years and manufacturing activity and trade at
standstill, this is one data point that India can cheer about amidst the Covid-19 pandemic.
While it jumped by $8.2 billion in the week ended June 5, 2020, it is important to note that
since the announcement of lockdown in March, it has surged by $31.8 billion. Hitting an all-
time high of $501.7 billion as on June 5, 2020, India has come a long way since its forex
reserves of $5.8 billion as of March 1991.
What are forex reserves?
Forex reserves are external assets in the form of gold, SDRs (special drawing rights of the
IMF) and foreign currency assets (capital inflows to the capital markets, FDI and external
commercial borrowings) accumulated by India and controlled by the Reserve Bank of India.
The International Monetary Fund says official foreign exchange reserves are held in support
of a range of objectives like supporting and maintaining confidence in the policies for
monetary and exchange rate management including the capacity to intervene in support of the
national or union currency. It will also limit external vulnerability by maintaining foreign
currency liquidity to absorb shocks during times of crisis or when access to borrowing is
curtailed.
Why are forex reserves rising despite the slowdown in the economy?
The major reason for the rise in forex reserves is the rise in investment in foreign portfolio
investors in Indian stocks and foreign direct investments (FDIs). Foreign investors had
acquired stakes in several Indian companies in the last two months. According to the data
released by RBI, while the FDI inflow stood at $4 billion in March, it amounted to $2.1
billion in April. After pulling out Rs 60,000 crore each from debt and equity segments in
March, Foreign Portfolio Investments (FPIs), who expect a turnaround in the economy later
this financial year, have now returned to the Indian markets and bought stocks worth over
$2.75 billion in the first week of June. Forex inflows are set to rise further and cross the $500
billion as Reliance Industries subsidiary, Jio Platforms, has witnessed a series of foreign
investments totalling Rs 97,000 crore. On the other hand, the fall in crude oil prices has
brought down the oil import bill, saving precious foreign exchange. Similarly, overseas
remittances and foreign travels have fallen steeply – down 61 per cent in April from $12.87
billion. The months of May and June are expected to show further decline in dollar outflows.
The sharp jump in reserves seen over the last nine-months started with the finance minister,
Nirmala Sitharaman’s announcement to cut corporate tax rates on September 20. Since then
the forex reserves have grown by $73 billion.
What’s the significance of rising forex reserves?
The rising forex reserves give a lot of comfort to the government and the Reserve Bank of
India in managing India’s external and internal financial issues at a time when the economic
growth is set to contract by 1.5 per cent in 2020-21. It’s a big cushion in the event of any
crisis on the economic front and enough to cover the import bill of the country for a year. The
rising reserves have also helped the rupee to strengthen against the dollar. The foreign
exchange reserves to GDP ratio is around 15 per cent. Reserves will provide a level of
confidence to markets that a country can meet its external obligations, demonstrate the
backing of domestic currency by external assets, assist the government in meeting its foreign
exchange needs and external debt obligations and maintain a reserve for national disasters or
emergencies. In his monetary policy statement on May 22, RBI Governor Shaktikanta Das
said, “India’s foreign exchange reserves have increased by US$ 9.2 billion in 2020-21 so far
(up to May 15) to US$ 487.0 billion – equivalent to 12 months of imports.”
What does the RBI do with the forex reserves?
The Reserve Bank functions as the custodian and manager of forex reserves, and operates
within the overall policy framework agreed upon with the government. The RBI allocates the
dollars for specific purposes. For example, under the Liberalised Remittances Scheme,
individuals are allowed to remit up to $250,000 every year. The RBI uses its forex kitty for
the orderly movement of the rupee. It sells the dollar when the rupee weakens and buys the
dollar when the rupee strengthens. Of late, the RBI has been buying dollars from the market
to shore up the forex reserves. When the RBI mops up dollars, it releases an equal amount in
rupees. This excess liquidity is sterilised through issue of bonds and securities and LAF
operations. “Despite the global dollar weakness, the RBI does not seem to be keen to step off
the gas as far as reserve accumulation is concerned.
Where are India’s forex reserves kept?
The RBI Act, 1934 provides the overarching legal framework for deployment of reserves in
different foreign currency assets and gold within the broad parameters of currencies,
instruments, issuers and counterparties. As much as 64 per cent of the foreign currency
reserves are held in securities like Treasury bills of foreign countries, mainly the US, 28 per
cent is deposited in foreign central banks and 7.4 per cent is also deposited in commercial
banks abroad, according to the RBI data. India also held 653.01 tonnes of gold as of March
2020, with 360.71 tonnes being held overseas in safe custody with the Bank of England and
the Bank for International Settlements, while the remaining gold is held domestically. In
value terms (USD), the share of gold in the total foreign exchange reserves increased from
about 6.14 per cent as at end-September 2019 to about 6.40 per cent as at end March 2020.
Is there a cost involved in maintaining forex reserves?
The return on India’s forex reserves kept in foreign central banks and commercial banks is
negligible. While the RBI has not divulged the return on forex investment, analysts say it
could be around one per cent, or even less than that, considering the fall in interest rates in the
US and Euro zone. There was a demand from some quarters that forex reserves should be
used for infrastructure development in the country. However, the RBI had opposed the plan.
Several analysts argue for giving greater weightage to return on forex assets than on liquidity
thus reducing net costs if any, of holding reserves. Another issue is the high ratio of volatile
flows (portfolio flows and short-term debt) to reserves which is around 80 per cent. This
money can exit at a fast pace. There are some differences among academics on the direct as
well as indirect costs and benefits of the level of forex reserves, from the point of view of
macro-economic policy, financial stability and fiscal or quasi-fiscal impact, former RBI
Governor YV Reddy said in one of his speeches.
 As of 5 June 2020, India's foreign-exchange reserves crossed $501.7 billion making it

the world's fifth highest reserve holder. Rising forex reserves can help the country
handle financial problems, satisfy external commitments and retain national disaster /
emergency reserves at periods when the economy has been under distress and
inflation is anticipated to compress by 1.5%. The deposits will finance at least one
year of India's import bill.
 The reasons for the increase – A sharp reduction in company tax in September 2019
attracting foreign direct investment (FPI inflows) in the Indian market, a fall in world
crude oil prices in Brent, a decrease in COVID-19 import spending, a decline in
international travel And during lockout, FDI inflows; especially big contributions by
multinational tech giants in Reliance Jio, and dramatic declines in gold imports.
 RBI uses the foreign exchange reserves to keep the rupee running steady by having to
sell / looking to buy the dollars as the rupee destabilizes / strengthens respectively.
The funds are kept in different ways, such as reserves in international accounts,
international treasury notes, commercial banks overseas and in the form of gold, but
the yields on these assets are marginal.
N22 27062020 UCO Bank eyes non-oil imports from Iran to sustain rupee-
rial trade _ Business Standard News
With India no longer importing oil from Iran, UCO Bank is looking at other avenues to keep
the rupee payment mechanism with Iran alive. According to A K Goel, MD and CEO of
UCO Bank, the lender is in talks with importers to use the mechanism for other imports. “In
the last few months, there has been no fresh inflow into the payments account. We are
exploring the opportunity to import other commodities, such as fresh fruits, under the
mechanism. Our role here is not only settlement, but also to facilitate trade between India and
Iran,” said Goel. In the wake of US sanctions on Iran, India cannot engage in dollar-
denominated trade with Iran. Hence, a special rupee-rial trade mechanism has been put in
place. Under this, oil refineries from India deposit funds into designated banks to import oil
from Iran. These rupee funds are then used to clear dues of traders that export from India to
Iran. UCO Bank and IDBI Bank are the two banks that support this payment mechanism, and
such deposits make up for a bulk of low-cost deposits for the lenders. However, even as oil
imports have dried up, exports have not fallen as much. According to government data,
imports from Iran stood at nearly $13 billion in 2018-19, which came down to nearly $1.35
billion between April and January in 2019-20. In contrast, the fall in exports was much less.
Exports to Iran stood at $3.5 billion in 2018-19, which fell to $2.80 billion between April and
January of this financial year. Rice, tea, sugar and pharmaceutical products are key items
India exports to Iran, with rice accounting for the largest share.
Awaits PCA exit
The Kolkata-headquartered bank on Friday reported a standalone pre-tax profit of Rs 16.78

crore in the March quarter, on the back of good treasury income and recoveries. It had posted
a pre-tax loss of Rs 1,552.02 crore in the corresponding period a year ago. The bank’s net
profit stood at Rs 6.78 crore, against a net loss of Rs 1,552.02 crore in the year-ago period.
Goel said the bank has complied with all key parameters required to come out of the Prompt
Corrective Action (PCA) framework — by bringing down its net NPA to 5.45 per cent,
maintaining a capital adequacy ratio of 11.70 per cent, having a leverage ratio of 3.57 per
cent and posting a positive return on asset in Q4. “It (exiting PCA) is a call the regulator has
to take but we may discuss or even write to the RBI on it,” Goel told the media in an e-
interaction. The bank hopes its overseas branches — one each in Hong Kong and Singapore
— will also come out of restrictions imposed by the regulators in the two countries. The bank
made a treasury profit of Rs 244 crore in Q4 compared to Rs 67 crore in the corresponding
period last year. The recovery from written-off accounts during the quarter was Rs 237 crore,
against Rs 85 crore. The bank is expecting 8-10 per cent growth in credit this financial year,
primarily backed by demand coming in from agriculture, MSME and retail sectors.
 The COVID-19 disease outbreak has resulted in a halt to trade amongst India and
Iran, impacting both lending entities – UCO Bank and IDBI Bank – as they have
missed on low-cost funds. So, UCO bank is hunting for other import alternatives such
as fresh fruit to maintain the rupee-rial exchange going. Exports, however, have not
fallen significantly in comparison with the imports.
 In May, UCO Bank lowered the repo-based lending rate to 6.90 percent by 40 basis
points. As a result, MSME loans will become cheaper and this fiscal year is projected
to see credit growth of 8 to 10 per cent.
 The bank retained the requisite capital adequacy ratio, the leverage ratio and the net
NPA from the PCA system in the hope that the restriction imposed on its overseas
branches will be uplifted.
N23 29062020 Collapsing Lebanese pound hits new lows, food imports
reduced By Reuters
BEIRUT (Reuters) - The Lebanese pound tumbled to new lows against the dollar on Friday
on a parallel market where it has now lost around 80% of its value since October, and a food
importer said the currency collapse was hitting imports. The currency crisis poses the biggest
threat to the stability of import-reliant Lebanon since the 1975-90 civil wars. Food importers
were being quoted a price of 7,500 to buy dollars on Friday, said Hani Bohsali, president of
the Syndicate of Importers of Foodstuffs, Consumer Products and Drinks. A second market
participant cited exchange rates of 7,300/7,600. That compares to rates of 3,850/3,900 at
licensed foreign currency dealers and the official peg of 1,507.5, which the central bank is
still applying for imports of wheat, medicine and fuel. The central bank said "liquidity was
secured" at the 3,850/3,900 rates in a statement announcing the activation on Friday of a new
electronic trading platform at licensed currency dealers. Black market volumes were "tiny", it
said. But Bohsali said food importers have only been able to secure 20% of their foreign
currency needs at the licensed dealers in the last two weeks, leaving them dependent on the
parallel market for the rest. "Food imports are being reduced. It cannot continue this way. If
you can't find dollars to import, you don't have any guarantee that if you ship something you
will be able to get the funds for it." The pound has continued to slump despite President
Michel Aoun's pledge on June 16 that the central bank would supply the currency market
with dollars to prop it up. Lebanon defaulted on its foreign currency debt in March, citing
critically low reserves.
 Since October, Lebanese Pound has shed 80 per cent of its worth to the dollar. This
has resulted in serious food shortages in Markets as the country imports more than 80
per cent of its daily necessities. Imports of fresh produce have plummeted sharply.
 Last year, 100,000 LP was worth $500 at this time, but today it is only equal to $10.
Acquiring power has disappeared, hyperinflation has settled in and the situation soon
will be close to that of Zimbabwe or Venezuela.
 The nation still has poor balances because it had foreclosed on its foreign currency
debt in March.
N24 30062020 Warren Buffett in his typical love for equity and US market
Now with global economy undergoing a tough time and all leading central banks fighting an
epic battle to stop the COVID induced economic contraction through money printing, “can
FX world bet against dollar (America) demise? “While dollar index has weakened almost 6%
from its recent high (103), but it has been muddling around 96/97 for the last one month, at
the same level before COVID crisis hit the world, despite FED adding $3 trillion to its
balance sheet since March. There is an interesting concept known as “Dollar Smile”. As per
this, “dollar tends to do well under two conditions” - when there is economic
slowdown/recession in US or when it outperforms the rest of world in economic growth.
Both these conditions lie at the flank of the smile construct.
Let's see how this works
When there is economic slowdown/recession in US, it means less global trade and hence less
flow of dollar, as US runs the world's largest trade deficit and in turn is the largest exporter of
dollar, which is the minimum, required to keep the global financial market running smooth
(alternatively known as exorbitant privilege). I don't need to highlight how much of global
debt outside of US is in dollar and what percentage of global trade happens in greenback.
During economic slowdown or recession in US, trade slows down and dollar liquidity gets
impacted, as less trade means lower dollar earnings for RoW (Rest of World) and hence
lower capability by indebted nations or corporates to pay dollar debt or trade payables
denominated in USD. That is why whenever there is a global crisis hurting the flow of global
trade, FED has to wear the hat of a global central bank and become the lender of last resort.
We saw that during 2008 GFC and post eruption of US-China trade war as well. Global trade,
which is almost 75-80% denominated in dollar, becomes the lynchpin for RoW and
especially EM (Emerging Markets) to earn dollar through export to pay their debt/ trade
payables. In second case, when US outperform the RoW, it is no brainer. Dollar has to do
well because of tighter monetary policy. We saw a glimpse of it when FED hinted at balance
sheet and rates normalization in 2015/16. It is only when US economy muddles through or
keeps rolling at the bottom of curve, dollar gets beaten. Now, in post COVID world, we have
to take view on two things - how fast US can recover from COVID impact and which major
central bank (FED, ECB, BoE, BOJ or PBOC) will print more money incrementally. Post
GFC, it was US which came out of recession faster than RoW despite it being the epicentre of
crisis. Take your bet rightly.
 The Dollar Spot Index dropped back on expectations about global economic growth
after increasing by 10 per cent via the high of COVID-19 at the end of March. Since
March 23, the index has been down more than 6 percent.
 The dollar is both a safe haven and a significant beta currency. Dollar continues to do
better when US economic expansion outshines the rest of the world, and even when
US global downturn. This term is Identified as 'Money Grin'.
 But the growth in the Rest of the World (RoW) in 2021 could outperform the US,
meaning the US dollar index could worsen. The aspirations of US GDP would need to
be overhauled to help the outcomes.
N25 02072020 Euro Is Riding a Wave of Confidence on Europe Pandemic

Response by Bloomberg
(Bloomberg) -- The euro’s best rally in more than two years looks set to extend, with a host
of market metrics reflecting growing confidence in Europe’s pandemic response. The
currency completed its biggest two-month advance against the dollar and a trade-weighted
index of its strength rose for a third quarter. At the same time, options are relaying optimism
on multiple fronts -- signaling gains versus the greenback over the next three months, and a
drop in bearish sentiment versus the yen, a traditional haven currency, to the lowest since
January.
The latter in particular is an indication of confidence that governments in the euro area will
continue to be quick to protect the public from a second wave, or an extended first wave, of
the pandemic better than many other regions with lockdowns or social restrictions. That in
turn suggests a better chance of the region outperforming in terms of economic growth,
potentially attracting larger capital inflows that would support the euro. And with bets the
Federal Reserve will implement yield-curve control on the rise, coupled with the slim chance
of rate cuts by the European Central Bank, interest-rate differentials aren’t potential
headwinds for the euro. Euro optimism isn’t limited to options. The spot market too is
sending bullish signals in the form of two developing technical patterns versus the dollar.
The so-called golden cross formation on the daily chart suggests the common currency has
the potential to challenge its June 10 high of $1.1422, which is backed up by Tuesday’s first
close above the 21-monthly moving average since August 2018. Still, expectations remain
relatively low for such a move to happen soon, as shown by demand for options that pay out
on large moves. That, in turn, suggests there are still risks that euro-bullish views may not
pay out, should demand for havens return on renewed virus and trade-war concerns, or
around the U.S. elections in November. © Reuters. Euro Is Riding a Wave of Confidence on
Europe Pandemic Response on Wednesday, the euro swung between modest gains and losses,
following data that showed factories across the euro area recorded a stronger performance
than initially reported in June.
 In the middle of the pandemic, the Euro is expected to be less affected than USD but
also influenced by the Yen, as the former displays a moderate bullish pattern in
contrast to USD, while the greenback has suffered a lot in the last year, in addition to
the question of a pandemic, trade war, and coming US elections have lifted Euro to do
well.
 A golden formation on the chart that depicts the bullish pattern, i.e., the Euro / USD
chart shows golden formation when taking into account the 400-day moving average,
and further suggests that the effect of coronavirus will be less, as the industries have
seen the light of strong revival.
 With such an increase in the euro, the strategy that is to come might opt for a few
minor rate cuts, yet unhinging euro with such changes.
N26 20072020 Euro hovers near four-month peak as market looks to EU

summit By Reuters
TOKYO (Reuters) - The euro hovered near four-month highs against the dollar on Monday as
investors held on to hopes that European leaders would break a deadlock and hammer out an
economic rescue deal as their marathon summit reached a record length. The euro changed
hands at $1.1439 ( ), just below a four-month high of $1.1452 touched on Wednesday. EU
leaders were at an impasse over a proposed 750 billion-euro ($858.30 billion) recovery fund,
which is supposed to be raised on behalf of them all on capital markets by the EU's executive
European Commission. That would be a historic step towards greater fiscal integration for the
union, but a group of "frugal" wealthy north European states were pushing for a smaller fund
and seeking to limit how pay-outs are split between grants and repayable loans. A source said
350 billion euros on grants was the maximum acceptable for the camp of thrifty northerners,
compared to 400 billion seen as the bare minimum by many others, including Germany and
France. Diplomats said it was possible that they would abandon the summit and try again for
an agreement next month. But market players expect them to reach a deal in the future even if
they fail to do so this time. "I don't know what to expect from the summit. But even if there is
no agreement, the impact will be limited given the euro appears to have a fairly strong
momentum these days," said Yukio Ishizuki, senior strategist at Daiwa Securities. The dollar
is broadly weak as investors maintained strong risk appetite, betting on more stimulus not just
from Europe but also the United States. The dollar Index stood at 95.949, near three-month
low of 95.716 touched last month.
A battle in the U.S. Congress over a new coronavirus-aid bill began late last week as
Republicans and Democrats pushed for their own agenda. The Republicans want the
upcoming coronavirus aid bill to cost no more than $1 trillion while leading Democrats have
pledged to fight for much more - in the range of the $3 trillion bill. "We see more political
pressure on the Republicans to compromise on Democratic objectives because Republicans
are trailing badly in polls... Senate Republicans are not in a position to hold back stimulus,"
wrote Steven Englander, head of global FX strategy at Standard Chartered (OTC: SCBFF)
Bank New York branch in a report. Expectations of more government spending have offset
worries about rising coronavirus cases in the United States as well as fears over deteriorating
U.S.-China relations. The Japanese yen was little changed at 107.07 per dollar. It showed no
reaction to Japan's trade data that showed exports plunged 26% from a year earlier in June,
worse than expected. Elsewhere, the British pound traded flat at $1.2570 while the Australian
dollar changed hands at $0.6999. The offshore Chinese yuan traded at 6.9889 per dollar, a tad
below last week's four-month peak of 6.9806.
 With the forthcoming marathon meeting, which will pass a bill for a stimulus
package, the Euro has strengthened and it is flying close to the rate of four-month
resistance (highs), as the global market expects EUR 750 billion.
 Even if the agreement fails to work at the marathon meeting, it was previously
reported that Euro 's position against the dollar will not be destroyed, as the bears
have a political fight within the US Congress.
 The dollar is going modestly high and low as one looks at other forex pools, while the
euro is picking up tops, that is, EUR / JPY was 114 in the early week of May, and is
currently selling at 123, while USD / JPY is picking up 106.
N27-Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as

Canada’s Inflation Figure for June Increases
The Pound to Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing
currently trading around CA$1.711. The Canadian Dollar (CAD) struggled to gain against the
Pound (GBP) despite Canada’s better-than-expected annual inflation for June. The figure shot
up by the most in 9- years, leaving investors feeling more confident that the Canadian
economy could be on the road to recovery.
Mark Chandler, the head of Canadian Fixed Income and Strategy at RBC Capital Markets,
commented: ‘We know from the retail sales report yesterday, the flash estimate for June, as
well as our own proprietary card spending data that you did get a bounce back in consumer
spending in it looks to be early July that was above a year ago.’ ‘[However, if] you believe
the Bank of Canada, things are still going to be bumpy as we go along.’
Meanwhile, CAD has suffered on mixed-reports for the Canadian economy, with a
Bloomberg/Nanos survey showing that many Canadians believe that the worst is yet to come
for the nation.
However, the ‘Loonie’ has benefited from signs that oil-prices could head higher as hopes for
a global economic recovery were boosted by confidence in recent Covid-19 vaccines, which
showed a degree of success in human trials. Pound (GBP) Steady as Post-Brexit Jitters Haunt
UK Markets
A senior source told The Daily Telegraph: ‘The Government has been making it clear for a
while now that it is prepared for no deal. Britain isn’t going to budge on fundamentals like
fishing rights, so it’s all in the hands of the EU.’
Meanwhile, Sterling’s gains have been capped by growing tensions between the UK and
China, which could jeopardize post-Brexit trade opportunities.
Steven Lynch, the managing director of the British Chamber of Commerce in China,
however, was more optimistic that the two powers could avoid further conflict. Mr Lynch
said: ‘We hope that British automotive manufacturers who both import vehicles into China
and manufacture locally will not be targeted for the UK government’s decision.’
GBP/CAD Outlook: Could Post-Brexit Fears Continue to Drag Down Sterling? Pound (GBP)
investors will be looking ahead to tomorrow’s release of the UK CBI Industrial Trends
Survey for July. Any signs that the UK’s industrial sector remaining in negative territory
would prove GBP-negative. The Canadian Dollar (CAD) could continue to rise against GBP
this week if oil prices continue to grow. Any improvement in risk-sentiment would also buoy
the risk-averse ‘Loonie’. The GBP/CAD exchange rate will likely remain subdued into the
weekend with fears continuing to grow over the UK-EU Brexit situation. Any signs that the
stalemate between the two countries could remain unresolvable would prove GBP-negative.
 Canadian dollar is on a rise as the inflation rate has improved and has shown the
highest growth from last 9 years. The reason is being that the demand for the products
has increased and the spike in corona cases has also reduced.
 Another reason for rise in the Canadian Dollar is that the prices of oil has started to
show a positive trend leading to rise in CAD as Canada is an oil exploration country.
 GBP is showing a negative trend due to rise in tension between China and UK trade
off. The UK Government could be expected to trade with the European Union on
World Trade Organisation (WTO) terms. As a result, Sterling investors have become
anxious of a hard-post-Brexit trade transition.
N28- Hedging Costs at Decade Low Lure India Firms Back to Dollar Debt
(Bloomberg) -- Indian borrowers stung by the pandemic have found financing costs in the
dollar bond market too pricey recently. But that’s changing as their currency hedging costs
decline. Six-month Mifor swap rates, a combination of the London interbank offered rate and
dollar-rupee forward premiums used by India’s borrowers to hedge exchange rate risks, are
near a nine-year low. The cheaper hedging costs will give an additional impetus to
companies, including Adani Ports & Special Economic Zone Ltd., Lalitpur Power Generation
Co. and the nation’s biggest lender State Bank of India, seeking to issue dollar notes. “The
fall in offshore hedging costs boosts prospects for more Indian companies to issue dollar
bonds at reasonable costs,” said Prabal Banerjee, group finance director at conglomerate
Bajaj Group, the parent of Lalitpur Power. Indian companies had issued a record number of
offshore notes in the first three months of 2020. But sales have plummeted since amid the
coronavirus fallout and the world’s biggest lockdown. Borrowers may benefit from cheaper
access to the dollar bond market, as they must repay a record $4.6 billion of foreign-currency
notes next quarter. The fall in hedging premiums cuts companies’ overall borrowing costs
and could help some raise funds abroad at rates as much as 100 basis points cheaper than
onshore. The decline in hedging expenses stems in part from a recent rebound in the rupee,
which has gained 1% in July. That makes it one of the best performing Asian currencies for
the month and has helped it pare losses to 4.5% so far in 2020. “The rupee’s recovery could
see the pipeline for overseas issuance resume as it highlights an improving sentiment among
global investors for Indian assets,” said Banerjee at Bajaj Group.
 The pandemic put a toenail on the indian market, but creditors were stepping up their
appetite for the greenback, which in return was better option to hedge, and the scale
based was 100 basis points lower than usual. Which means the hedging companies see
a lower premium number, but the next quarter will be the lenders' deciding factor.
 In these situations, the USD was seen as depreciating as compared to Asian countries,
of which India saw considerable growth, i.e. the value of USD / INR as of April 2 was
as high as $77.20, while at the end of August it was as high as $74.49, showing that
exports were on the better side, while imports were cheap, which further strengthened
the hedging cost.
 Such price improvement will help countries sustain their BOP, but there is a growing
problem for the country like India as it would lift debt levels due to sales decline.
N29- Goldman Warns Dollar’s Role as World Reserve Currency Is at Risk
(Bloomberg) -- The U.S. dollar’s reign as the world’s reserve currency is coming under
threat, as evinced by the recent surge in prices, according to Goldman Sachs Group Inc
(NYSE:GS). The greenback faces several risks, including that the U.S. Federal Reserve may
shift toward an “inflationary bias,” a rise in political uncertainty and growing concerns
surrounding another spike in coronavirus infections in the country, according to Goldman
strategists. They added that the debt build-up as a result of the pandemic may lead to
debasement fears.
Gold’s record-breaking rally highlights growing concern over the world economy. The bank
raised its 12-month forecast for gold to $2300 an ounce from $2000 an ounce previously.
That compares with a value of around $1930 currently. Meanwhile, the Bloomberg Dollar
Spot Index is on course for its worst July in a decade. The drop comes amid renewed calls for
the dollar’s demise following a game-changing rescue package from the European Union
deal, which spurred the euro and will lead to jointly-issued debt.
Ballooning Debt Pile
For Goldman, the growing level of debt in the U.S. -- which now exceeds 80% of the nation’s
gross domestic product -- and elsewhere, boosts the risk that central banks and governments
may allow inflation to accelerate. “The resulting expanded balance sheets and vast money
creation spurs debasement fears,” Goldman strategists said. This creates “a greater likelihood
that at some time in the future, after economic activity has normalized, there will be
incentives for central banks and governments to allow inflation to drift higher to reduce the
accumulated debt burden,” they said. The Fed is set to deliver its latest decision Wednesday.
The bank sees U.S. real interest rates continuing to drift lower, boosting gold further.
 Greenback, regarded as the global reserve currency, is on the brink of collapse with
the increasing valuation of Gold, further influenced by the increasing inflationary
pressure which, in turn, begun when the fed lowered interest rates and greenback
issuance, so that the US could have a large amount of stimulus ($2.8 trillion) due to
the growing concern of the second phase of coronavirus on the boom.
 The spot-market USD index has seen a downturn emanating from inflationary trends
that are clouding since the gold price rises in addition to the euro and Asian countries,
doing better than a dollar bill that further impacted the country's balance sheet,
indicating importers would benefit quicker if things were not governed by the fed.
 Although the theory of the gold standard is inferred that greenback has some sort of
artificial correlation with gold prices, that is, if gold prices are bullish USD tend to
slide, when the nation issued debt on the one hand and accumulated treasury and
many other properties to control the greenback slide.
N30 US Dollar Decline May Accelerate After Jackson Hole Symposium
JACKSON HOLE SYMPOSIUM: HOW WILL USD REACT?
Perhaps the biggest event risk for the week ahead will be the annual Jackson Hole
symposium where Fed Chairman Jerome Powell will be giving a speech reviewing monetary
policy. Typically, this event generates a significant amount of media coverage and the current
financial and economic circumstances, in light of the coronavirus pandemic, have amplified
the atmosphere of urgency.
The event this year will be held digitally and livestreamed on August 27 at 9:10 am EST
according to Bloomberg News. With unprecedented stimulus and rates near zero, investors
and policymakers alike will be keen to hear about the Fed’s overview and what the path
going forward may be. The Fed has made it clear that they have many levers to pull and will
not hesitate to do so in order to preserve financial stability. Much in line with moral axiom of
“always a price to pay for everything you do”, there is growing concern about the integrity of
financial markets. Unlimited quantitative easing (QE) and depressed yields have caused
investors to flock to riskier and relatively illiquid assets in order to meet their growth
objectives. This past month, U.S. high-grade debt sales hit a record $1.34 trillion for the year.
Concern about the financial integrity of higher-rated and lower-rated corporate debt continues
to be sticking point among policymakers. Easy access to liquidity has eased credit crunch
fears and has supported firms which may otherwise be proverbially underwater. However, if
the Fed hints at less-aggressive easing, assets that were born and raised in an accommodative
environment may find themselves hurting in the real world.
Concerns about insolvency may lead to aggressive credit downgrades and liquidation. The
problem with these bespoke instruments will be then aligning buyers and sellers who may
have no interest in exchanging at their respective price levels. The subsequent volatility
would likely spill over into broader financial markets and require the Fed again to intervene
and stabilize a precarious market it indirectly helped to create.
US DOLLAR SELLOFF MAY DEEPEN ON IMPROVING DOMESTIC DATA
US Dollar selling pressure may gain momentum if a slew of consumer-related data beat
market expectations and reinforce the narrative of economic stabilization. The Citi Group
Economic Surprise Index shows data on a global level has been outperforming relative to
economists’ expectations. It also buttresses the point that policymakers and analysts may
have overestimated the severity of the recession.
DATA OUTPERFORMING EXPECTATIONS DESPITE SLOWDOWN IN GLOBAL

ECONOMIC ACTIVITY
Citi Group Economic Surprise Index - world

Some key data points to monitor include consumer confidence, new home sales, initial
jobless claims, personal spending for July and more. If the statistics fall in line with the
broader trend of outperformance, this may pressure demand for havens like the US Dollar
and accelerate its decline. With this in mind, traders may be preparing themselves for another
week of Greenback weakness.
 Around August 28, the much anticipated and the much-awaited results of the Jackson
Hole symposium is taking place. The US Fed Chairman Jerome Powell is to address
the review of Monetary policy. The people are converting from being risk averse to
risk takers as the unlimited QE and low yields have pushed them to meet the final
growth objectives. Simple access to funding has relieved credit crisis concerns and
helped businesses that might otherwise proverbially be submerged. However, if the
Fed implies less-aggressive tightening, real-world assets that have been born and bred
in a contractionary setting could be affected.
 The severity of the recession was overestimated and the Citigroup economic Surprise
Index shows the corrected data as compared to the forecasted data. The Data showed
positive results for both the US and China.
 The US dollar showed high levels of volatility around the time of the symposium. The
dollar may be hard-hit if the Feds mention changes in its interest rates, inflation and
asset purchase going forward. Keeping the key segments like the US jobless claims,
personal spending, consumer confidence and purchasing power in the month of July,
the traders are expecting greenback weakness for another week.
 The forthcoming Jackson Hole Symposium could offer as a forum that makes a
convenient conceptual impetus for gold price activity that drives a wider collapse or
restart of the broader bullish trend.
N31 DAX 30 Index Hampered by Covid-19 Concerns As German Bunds

Eye Fresh Highs
ASIA-PACIFIC RECAP
The story of the Asia-Pacific trading session proved to be the surge seen in gold prices, as the
precious metal surged to fresh yearly highs off the back of falling US Treasury yields and US
Dollar weakness. The ASX 200 tumbled below 6,000 before clawing back lost ground later in
the session as Victoria, Australia’s second most populous state, recorded a record number of
daily Covid-19 cases and deaths. Risk-sensitive currencies mainly outperformed their haven-
associated counterparts, as the AUD/JPY and NZD/JPY exchange rates rose alongside the
trade-sensitive AUD/USD, shrugging aside the possible escalation of tensions between
the US and China. Looking ahead, retail sales and PMI data out of Europe headline the
economic docket as traders being to look ahead to Friday’s non-farm payroll report.
COVID-19 FEARS WEIGHING ON GERMANY’S BENCHMARK INDEX
A glance across German asset classes hints at growing concern among regional investors
amid a potential ‘second wave’ of coronavirus infections. Although case numbers in Europe’s
largest economy remain substantially lower than the levels seen in March, the 7-day moving
average tracking daily infections jumped above 500 for the first time in over a month on July
22, notably souring investor sentiment. In fact, the significant increase in cases seemingly
coincided with the DAX 30 falling from post-crisis highs and the haven-associated German
10-year Bund climbing
Furthermore, the VDAX – DAX 30 Volatility Index – bounced higher from post-crisis lows,
suggesting a creeping sense of uncertainty among German equity investors. Given the
fragility of the nascent economic recovery, it stands to reason that rising cases of Covid-19
may continue to hamper the performance of regional risk assets, absent the introduction of an
adequate vaccine. With that in mind, infection numbers will be intently scrutinized over the
coming weeks, as a marked increase could bring about the re-imposition of economically
devastating lockdown measures and probably lead to a substantial discounting of German
asset prices.
GERMAN 10-YEAR BUNDS DAILY CHART – EYEING PUSH TO MULTI-MONTH

HIGHS
The technical outlook for the German 10-year Bund hints at an extension of the uptrend from
the June low (102.58), as the RSI jumps above 60 and into bullish territory. The MACD
indicator reinforces this positivity as the ‘faster’ MACD line accelerates to the topside after
crossing over the ‘slower’ signal line. However, resistance at the June high (105.99) seems to
be capping buying pressure for now and may continue to do so should the RSI
and MACD indicators fade from recent extremes. To that end, a daily close above the
psychologically imposing 106 level is needed to validate bullish potential and possibly signal
a resurgence of risk aversion.
On the other hand, a short-term pullback to support at the 105 mark could be reflective of
improving market sentiment and would probably coincide with a marked appreciation in risk-
sensitive assets.
DAX 30 INDEX DAILY CHART – 200-DMA PROPPING UP THE GERMAN

BENCHMARK
The 200-day moving average may continue to provide a support platform for the German
DAX 30 index, as buyers eye a potential push above the yearly open (13,126) to fresh post-
crisis highs. However, with the RSI flopping below 50 and the MACD indicator extending its
retreat from the extremes seen in June, a surge above key resistance looks to be a step too far.
Nevertheless, the trend-defining 50-day moving average (12,492) may corral price higher
after crossing over its 200-period counterpart and could drive price to retest the July high
(13,315). A daily close above possibly carving a path for price to climb back towards the
February high (13,829).
 With the fear of second wave of covid hitting Germany through the German asset
classes as the DAX 30 fell from its post-crisis highs and the German government
bonds considered as safe haven, started climbing back.
 The volatility DAX index shot up over the all-time lows post-crisis phase creating a
sense of uncertainty among the investors. The increasing cases and the absence of the
vaccine is going to act as adding oil to the already burning fire that effects the
economy.
 As the RSI jumped above 60 and showed a bullish trend through the German 10-year
Bund. The MACD indicator reinforces this positivity as the ‘faster’ MACD line
accelerates to the topside after crossing over the ‘slower’ signal line. The 200-day
moving average may continue to provide a support base for the German DAX 30
index, as buyers see a potential move to fresh post-crisis highs above the annual open
(13,126)
N32 Oil Price Outlook Hinges on OPEC Meeting as US Output Remains

Stagnant
FUNDAMENTAL FORECAST FOR OIL: NEUTRAL
The price of oil cleared the July high ($42.51) during the first week of August even though
OPEC prepares to reverse the production cuts in response to COVID-19, and it remains to see
if the group will change gears over the coming months as the press release from the previous
JMMC meeting reiterates that “the outcomes of the June Meetings extended the first phase of
the production adjustments until 31 July 2020.”
It seems as though OPEC and its allies will unwind the voluntary measures from earlier this
year as the group insists that “the extra supply resulting from the scheduled easing of the
production adjustment will be consumed as demand recovers,” and the group may restore
crude out to pre-pandemic levels as the update to the Monthly Oil Market Report (MOMR)
reveals an improved outlook for oil consumption.
“Global oil demand growth in 2020 is revised up by 0.1 mb/d from the previous month’s
assessment” according to the July MOMR, with the report going onto say that “the upward
revision reflects slightly better-than-expected oil demand from the OECD region in2Q20,
which more than offset downward adjustments to non-OECD oil demand during the same
quarter.” In turn, the expiration of the June agreement may drag on oil prices, but another
round of voluntary production cuts from OPEC and its allies may keep oil prices afloat as US
crude output sits at its lowest level since 2018.
Recent figures from the US Energy Information Administration (EIA) showed crude
production narrowing to 11,000K b/d in the week ending July 31 after holding at 11,100K b/d
for two consecutive weeks, and a further slowdown in US output may help to keep the price
of oil afloat as OPEC Secretary General Mohammed Barkindo pledges to provide
“reassurance to the market that the OPEC+ group is proactive and fully observant of the ever-
evolving oil market fundamentals.”
With that said, developments coming out of the JMMC meeting may influence the price of oil
as OPEC and its allies prepare to restore crude output to pre-pandemic levels, but another
round of voluntary production cuts may keep energy prices afloat as US output remains
stagnant.
 Oil prices overshadowed the high of July in the month of August as the OPEC plans
on reducing the production cuts as a response to the pandemic. The early cuts in the
production of oil will be corrected as the demand recovers according to the Monthly
oil Market report (MOMR).
 Keeping prices afloat- The slowdown in US output may help keep the prices afloat.
The meeting of JMMC may influence the price of the oil as OPEC strives to bring oil
price to pre-pandemic levels. As a result of which the crude oil prices may face a
rather interesting and volatile market.
N33 EUR_USD Rally Pushes RSI Into Overbought Zone Ahead of FOMC
Minutes
EUR/USD is on track to mark the longest stretch of gains since 2004 after appreciating for
eight consecutive weeks, and it remains to be seen if the FOMC Minutes will derail the
bullish behaviour as the RSI preserves the upward trend established in March and climbs
above 70 for the fourth time this year.
The extreme reading in the RSI is likely to be accompanied by a further appreciation in

EUR/USD amid the behaviour seen in July, and more of the same from Chairman Jerome
Powell and Co. may keep the exchange rate afloat as the Federal Reserve appears to be in no
rush to alter the course for monetary policy. In turn, the FOMC Minutes may highlight a
dovish forward guidance as the central bank vows to “increase our holdings of Treasury and
agency mortgage-backed securities at least at the current pace,” and the provisions to the US
Dollar liquidity swap lines unveiled in March may continue to drag on the Greenback as the
arrangements “serve as an important liquidity backstop to ease strains in global funding
markets.”
At the same time, it seems as though the crowding behaviour in the US Dollar will persist
even though the FOMC relies on its asset purchases along with its lending facilities to
support the US economy as retail traders have been net-short EUR/USD since mid-May.
With that said, current market conditions may EUR/USD afloat ahead of the FOMC Minutes,
and the exchange rate appears to be on track to test the May 2018 high (1.1996) as the RSI
pushes into overbought territory for the fourth time in 2020.
 Bear in mind that, near the end of June, a 'golden bridge' materialized in EUR/USD
when the 50-day SMA (1.1502) passed over the 200-day SMA (1.1134), with the
moving trends spreading positive curves through the latter half of the year.
 Around the very same time, a bull flag creation trotted out after the unsuccessful
efforts to suppress itself below 1.1190 (38.2 percent retracement) to 1.1220 (78.6
percent expansion) zone in July, with the Relative Strength Index (RSI) supporting
validating the continuity trend as the oscillator boosted alongside trend - line aid to
maintain some upward trend set in March.
 The recent developments in the RSI suggests yet bullish trend will continue and only
gather momentum over the next few days accompanied by the further appreciation in
EUR/USD amidst the
N34- Japanese PM Abe Resignation, USD/JPY and Nikkei Analysis:
Japanese Prime Minister Shinzo Abe has resigned from his post due to health concerns. This
has been brewing over the past few days but now has finally been confirmed. With almost 8
consecutive years of service Abe has been at the forefront of numerous policies, economic
reform and much more for the island nation. Japan being an economic super power makes
this news quite significant globally, and may well result in systemic ripples throughout
financial markets. Today saw the Japanese Yen (JPY) and Nikkei 225 react quite
significantly to the news which may extend further as there is still uncertainty around a
successor and how this may affect current economic policies. How will the future pan out for
the Japanese economy?
The US Dollar has given back much of its gains against the Yen after yesterday’s speech by
Fed chair Jerome Powell at the Jackson Hole Symposium. The multi-year descending triangle
is still in play as price action continues its path to support. The news of PM Abe’s resignation
may result in further downside pressure as uncertainty prevails. Technically traders will look
for the psychological level of 105.00 (yellow) as initial support after which the July 103.55
low may follow.
NIKKEI 225 DAILY CHART
The Nikkei 225 reacted with a sharp sell-off in Japanese stocks. With volumes reaching new
highs (yellow) as of June 2020, the near-term upward trend has been disrupted. Stocks have
given back much of its initial decline however; traders should proceed with caution as doubt
around the future of Japan endures. Further downside may be eminent as the 22241.9 (23.6%
Fibonacci) looms as initial support – Fibonacci taken from February 2016 low to October
2018 high. The 100-day Moving Average (MA) coincides with this level and support a break
below this support zone may signal a bearish reversal. This potential reversal in momentum
may be imminent but after a strong upward move since March 2020 lows, it may not be wise
to be too decisive in judgment as the Japanese government will need to provide more clarity
on the situation.
JAPAN AND UK TRADE DEAL
Japan and the UK have been in trade talks which are forecasted to conclude in September.
This is a favourable deal for Japan as they are a major exporter to the UK and could allow
Japan to avoid tariff increases on their goods. With Prime Minister Abe resigning, this may
affect the deal with delays or even abandon the pact all together depending on what happens
going forward. If the deal is aborted, Japan will see tariffs rise next year which could severely
hurt Japanese exporters. Yen and Nikkei traders should keep a close eye on these negotiations
as this may have substantial consequences for the country.
 Japanese Abe resignation after serving for 8 years due to health reasons. Due to this,
the JPY and Nikkei 225 react significantly to the news may further extend as there is
still uncertainty around a successor and how it effects the current economic policies.
 In Japanese stocks the Nikkei 225 responded with a sharp sell-off. The near-term
upward trend has been broken with volumes approaching new (yellow) highs as of
June 2020. However, stocks have given back most of their initial downturn, traders
should be wary as concerns about Japan 's future remain.
 Japan and the United Kingdom took part in trade talks that are expected to conclude
in September. This is a wonderful move for Japan as they are a huge exporter to the
UK which will allow Japan to stop tariff increases on their goods. This will affect the
keep deal, or even leave the arrangement all together depending on what happens in
the future, with Prime Minister Abe 's departure. If the deal is scrapped, Japan will see
tariff hikes next year, which could have a significant impact on Japanese exporters.

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International Financial Management

News Article Analysis

My learnings from the news:-

N2 03062020 Dollar on defensive

Sterling traded at $1.2491 (GBP=D4), having hit a one-month high of $1.2506.

My learnings from the news-

N3 05062020 USD_CNH bounces from five-week lows

My learnings from the news-

N4 06062020 India's forex reserves surge to all-time high of $493.48 billion

My learnings from the news-

N5 06062020 FPIs Invest Rs.18589 Cr

My learnings from the news-

N6 07062020 Dollar is dented as data bolsters hope for economic recovery _

My learnings from the news-

My learnings from the news-

N8 10062020 AUD_USD's recovery from session low stalls after weak

My learnings from the news-

My learnings from the news-

N10 11062020 Fed Reserve Press Release

Decisions Regarding Monetary Policy Implementation

o Conduct overnight reverse repurchase agreement operations at an offering rate of 0.00

My learnings from the news-

Here are the main takeaways from the Fed announcement:

My learnings from the news-

N12 12062020 Safe-haven currencies gain on worries of lingering economic

My learnings from the news-

What to look for around USD

US Dollar Index relevant levels

My learnings from the news-

On Monday, Bloomberg spread expectations, based on a survey of economists, suggesting

How could it affect USD/JPY?

My learnings from the news-

My learnings from the news-

N16 18062020 Dollar holds advantage as anxiety grows over rise in

My learnings from the news-

GBP/USD dropped 0.1% to 1.2538, while EUR/GBP rose 0.2% to 0.8974.

USD/NOK rose 0.1% to 9.5286 and EUR/NOK rose 0.1% to 10.722.

My learnings from the news-

N18 22062020 India’s current account may turn surplus on coronavirus,

Barclays current-account tracker points to a small deficit of $3 billion in 1Q 2020, followed

My learnings from the news-

N19 23062020 Pound Canadian Dollar (GBP_CAD) Exchange Rate Rises

My learnings from the news-

N20 24062020 Indian rupee surges 17 paise to 76.03 against US dollar -

My learnings from the news-

What are forex reserves?

What’s the significance of rising forex reserves?

What does the RBI do with the forex reserves?

Where are India’s forex reserves kept?

Is there a cost involved in maintaining forex reserves?

My learnings from the news-

 As of 5 June 2020, India's foreign-exchange reserves crossed $501.7 billion making it

Awaits PCA exit

The Kolkata-headquartered bank on Friday reported a standalone pre-tax profit of Rs 16.78

My learnings from the news-

Let's see how this works

My learnings from the news-

N25 02072020 Euro Is Riding a Wave of Confidence on Europe Pandemic

My learnings from the news-

N26 20072020 Euro hovers near four-month peak as market looks to EU

My learnings from the news-

N27-Pound to Canadian Dollar (GBP/CAD) Exchange Rate Steady as

N29- Goldman Warns Dollar’s Role as World Reserve Currency Is at Risk