Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
We expect the Indian rupee to lose grounds against the USD in the short-term,
- First of all, there has been a shift in the retail sentiment, which has so far been one of the reliable short-term indicators. Retail sentiment data from the USD/INR are largely used as a contrarian indicator since the retail sentiment tends to move in the opposite direction of the market.
- The most popular options market sentiment indicator is the put-call ratio (PCR). This week, the retail sentiment based on data from the National Stock Exchange (NSE) has once again shifted from bullish USD/INR to bearish USD/INR, which suggests that the exchange rate might actually move higher. As of today, the PCR is at 1.15, suggesting retail positioning in USD/INR shorts more.
- Moreover, the recent fundamentals point to weakness in the currency. With the election getting over with India and with Prime Minister Narendra Modi returned to power with a sweeping victory, the Trump administration in the United States is ready to turn the focus on India and get a trade agreement done with fairer terms with the United States. Calling India a “high tariff nation” and repeatedly accusing the South Asian country of failing to provide the US with unlimited access to its markets, the Trump administration is reportedly ready to tighten the screw on trade and reduce U.S. deficits with India in goods. In June the U.S. is likely to scrap preferential trade agreement that allows $5.6 billion worth of duty-free imports from India.
Trade idea:
- We would recommend buying USD/INR and hold it till the next shift in sentiment. The exchange rate is currently at
