Currency Market Snapshot For The Week
· INR depreciated by 0.05% against the USD last week and depreciated by 1.32% against the euro.
· USD fell by 0.54% on a week on week basis and is at a level of 99.86.
· The British pound appreciated by 0.47% against the USD
· Euro appreciated by 0.75% against the USD.
Global Bond Market Snapshot For The Week
· US 10-year benchmark bond yields rose by 1 bps last week.
· German 10-year bond yields rose by 4 bps at negative 0.49%, French 10-year bond yields fell by 1 bps.
· Italy’s 10-year benchmark yield fell by 26 bps to 1.60%.
· US benchmark Junk bond yields rose by 64 bps to 7.49%
INR ended the week lower last week as RBI Governor Shaktikanta Das, in an out-of-schedule monetary policy address announced that the Monetary Policy Committee decided to lower the repo rate by 40 basis points to an all-time low of 4.00% to combat economic risks linked to the COVID-19 pandemic. Further, the concerns over India’s weak macroeconomic fundamentals also prompted market participants to place bets against the INR.
INR depreciated by 0.5% against the USD last week and depreciated by 1.32% against the euro.
Global risk sentiment took a hit after China unveiled a plan to take a stronger stance on anti-government protests and dissents in Hong Kong. It proposed new security laws that would punish opposition to the mainland. However, US President Donald Trump said Washington would take “strong actions” if China introduces new national security legislation for Hong Kong. This ratcheted up concerns about Hong Kong’s autonomy and its special status.
USD exhibited high volatility last week by falling sharply in the early part of the week on hopes for a vaccine after U.S. drugmaker Moderna announced “positive” results for its potential COVID-19 vaccine on Monday. However, later the Medical news website STAT released a report that the U.S. drugmaker had provided insufficient data to determine the vaccine’s efficacy.
USD Index (DXY), which tracks the movement of the USD against six major currencies, fell by 0.54% on a week on week basis and is at a level of 99.86.
Further, the U.S.-China trade war intensifies after the US Senate passed legislation that could ban many Chinese companies from listing on U.S. exchanges or raising money from US investors without following regulatory and audit standards. This raised fears over whether the ‘phase-one’ trade agreement between the world’s two largest economies will remain in place.
Weak employment data in the US also weighed on sentiment. Report by the Labour Department on Thursday showed 2.44 million people sought unemployment benefits in the week ended May 16, bringing the total number of unemployed US citizens to nearly 40 million.
Weekly Global Bond Market Analysis
US 10-year benchmark bond yield rose by 1 bps last week and is at 0.66%, yields rose sharply to 0.73% on Monday but then retreated as U.S.-China tensions threaten renewed geopolitical concerns. Markit services flash purchasing managers index for May rose to 36.9 from 26.7, while the manufacturing gauge ticked up to 39.8 from 36.1.
Eurozone bond yields were largely down last week. German 10-year bond yield rose by 4 bps and is at negative 0.49%, France 10-year bond yields fell by 1 bps and is at negative 0.04%. Italy’s 10-year benchmark yields fell by 26 bps.
US benchmark Junk bond yield fell by 64 bps and is at 7.49%, Euro benchmark Junk bond yields fell by 34 bps to 5.56%.