The Fed has barely started its QE2 campaign and commodity prices are already buzzing with gold crossing $1,400 an ounce and crude trading at a two-year peak. Other commodities too are gaining strength. The dollar recovered, but at the cost of the euro. The common currency came under pressure amid renewed sovereign debt worries.
The war of words continues over currency and trade imbalances ahead of the G-20 summit. US president Obama joined the chorus even as China expressed its displeasure on the latest Fed move.
The principle downward trend of the dollar has not changed. That means risky assets and emerging markets will continue to attract a good chunk of the global flows.
India is no exception. And, with a spate of big-ticket issues lined up, the dollar deluge will persist. Today, we expect a subdued start owing to indecisive global cues. So, the bulls may have to wait a while before lifting the indices to record highs.
