Commodities, Currencies and Bonds - Feb 21, 2023 - Reliance Securities

By Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

ENERGY

- U.S. Markets were shut, but Brent Crude ended with gains on Monday's trade buoyed by optimism over Chinese demand, continued production curbs by major producers and Russia's plans to rein in supply.

- However, volumes were muted on Monday because of a U.S. market holiday for Presidents' Day.

- Domestic futures ended solidly higher on Monday's trade supported by demand.

- India's crude imports rose to a 6 month high in January, as refiners ramped up cheaper Russian supply.

- data from PPAC showed that imports were up 1.7% to 19.96 million tonnes, 3.5% higher versus January 2022.

- U.S. NYMEX Gas Markets were shut, but MCX futures fell marginally on Monday tracking Dutch futures amid bearish fundamentals.

BULLION

- International markets were shut.

- Domestic futures were mixed with gold ending marginally in the red and silver gained modestly on Monday's trade.

- Markets remained range bound with low volumes as investors looked out for upcoming U.S. economic data for clues on the Federal Reserve's rate hike path.

BASE METALS

- U.S. markets were shut.

- However, copper and aluminium gained on ShFE on Monday amid hopes of a recovery in Chinese demand.

- LME aluminium prices rose on Monday by supply concerns after reports that smelters in top producer China were curbing production.

- Among other metals on LME, copper, lead, nickel and zinc prices gained on Monday.

CURRENCY

- The Indian Rupee gained marginally on Monday, tracking Asian peers as the dollar index rally pauses.

- The Rupee settled at 82.7225 per U.S. dollar, compared with its previous close of 82.8300.

- Asian currencies recovered slightly on Monday after last week's selloff, with the Thai baht and the Philippine peso gaining around 0.7% and 1%, respectively this Monday's trade.

- Investors also remained cautious ahead of the FOMC meeting minutes due mid-week.

- Fed funds future indicates a near-80% chance of two 25 bps hikes at the next meetings, with a 53% probability of another similar-sized hike in June, according to the CME FedWatch tool.

- The bearish fundamentals could continue to dominate the market if the Fed minutes are hawkish.

- On the other hand, possible intervention from RBI could also reduce volatility in the markets. Data showed RBI's forex reserves fell $8.32 billion to $566.95 billion in week-ended February 10.

- Investors will also closely follow personal income, spending, PCE price index, and 2nd estimate for Q4 GDP growth rate.

- In the overseas markets, the U.S. Dollar Index in the Asian trading was trading marginally in the red ahead of key events and speeches this week.

- The Euro fell on Monday's trade despite ECB policymakers suggestions that interest rates in the euro zone have some way to rise, pushing up market pricing for the peak ECB rate.

- The Sterling ended flat on Monday's trade in a quiet session ahead of PMIs data which will give more hints on the state of the UK economy.

BONDS

- Indian bond yields eased on Monday, after rising sharply in the previous session, amid sluggish trading activity in the absence of fresh cues.

- The 10-year benchmark 7.26% 2032 bond yield ended at 7.370% on Monday compared to a to close at 7.388% on Friday.

Source : Equity Bulls

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