China Trade Surplus Beats Forecasts in July as Exports Stay Strong 
US Yen Intervention Unlikely to Deliver Lasting Recovery, Yardeni Says 
Australia Trade Surplus Returns in June as Iron Ore, Coal and LNG Exports Surge 
Oil Prices Set for Steep Weekly Losses as Hormuz Deal Stalls 
Canada, US Hold Constructive Trade Talks as Tariff Negotiations Continue 
Asian Stocks Cautious Ahead of US Jobs Data as Oil Rises 
BOJ Rate Hike Expectations Rise Ahead of September Meeting 
Asian Stocks Mixed as Chip Selloff Hits KOSPI, Nikkei Ahead of US Jobs Data 
Asian Currencies Hold Steady as US Dollar Nears Seven-Week Low Ahead of Key Jobs Data 
US Job Growth Seen Picking Up in July 
Dollar Holds Near Six-Week Low as Yen Loses Momentum Ahead of U.S. Jobs Data 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Falling implied USD/INR vols amid increasing optimism for reaching a phase-1 trade deal between the United States and China are supportive of the dollar-funded carry trade, according to the latest research report from Scotiabank.
Continued portfolio inflows chasing Indian assets are supportive of the high-yielding INR. The current levels of NIFTY share index and 10-year India government bond yield suggest the INR is now undervalued, which could be partly explained by persistent rises in India’s foreign reserves.
In addition, further economic reforms and stimulus measures will be implemented by the Indian government. It could reinforce foreign investors’ confidence in the economy and prompt them to pour more funds into India’s equity and bond markets.
Finance Minister Nirmala Sitharaman said late Wednesday that India’s cabinet has approved a INR 100bn fund to help clear stalled housing projects to boost the real estate sector, while India’s largest lender SBI and state-run insurance company LCI will contribute an additional INR150 billion, the report added.
Earlier on Tuesday, Sitharaman also said that the government will soon use its strong electoral mandate to usher in the next wave of reforms. In the meantime, we keep a close eye on India’s fiscal slippage that is credit negative for India and has contributed to the INR’s relative underperformance versus the IDR this year.
According to Bloomberg, India’s gross and net direct tax collection grew by just 5.0 percent and 2.7 percent respectively in the April-October period, with the government staring at a revenue shortfall of over INR1 trillion.
Earlier, Fitch Solutions on Wednesday raised India's fiscal deficit forecast to 3.6 percent of the GDP for FY2019-20 from the previous estimate of 3.4 percent, Scotiabank further noted in the report.
