Greek 'No' votes spurs risk-off sentiments in Euro zone; focus shift towards EM FX spot

Greece issue continued to remain at the centre-stage. In a latest development, Yanis Varoufakis resigned from the Greek finance ministry. 

EURINR: We believe the INR will weather Fed lift off-driven disruptions better than other EM high yielders. India's external vulnerabilities have declined substantially. We recommend funding INR longs using the HUF or EUR (the HUF is highly correlated to the EUR, our preferred short in G10).  

USDMXN: We believe Banxico will remain on hold until the Fed starts hiking and be reactive to the potential of destabilizing FX moves. Moderate FX depreciation will be tolerated. We recommend hedging by receiving the 2y TIIE, since Banxico rate hikes will be more gradual if a USD rally is delayed.

USDILS: We expect the BoI to pursue a weaker currency, with open market buying of USDs amid low inflation expectations and the zero lower bound on domestic rates. With the ILS still 6% expensive at current levels, we see significant potential upside, especially if the USD rises broadly, as we expect, on a Fed hike.

Long USDINR: One can buy USDINR above 63.42 levels for the target of 64.1 with a stop loss of 63.35. The pair in the previous sessions opened with a negative and made a low of 63.39. However, it ended the session with an inverted hammer like candle at 63.40 levels which indicates a strong bounce from current levels. Thus, we expect the USDINR will bounce for targets towards north.

Long USDINR: It is quite neutral to slightly bullish bias for intraday purpose but positions should be squared off or trade binaries for 20 pips. EOD purpose we recommend selling USDBRL from current levels levels for the target of 3.08 with a strict stop loss of 3.1524.