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Currency Outlook

Rupee Outlook

• Rupee depreciated for 3 rd consecutive session, hitting to its lowest level in 2 ½ months amid strong dollar and risk aversion in the global markets.

• Rupee is likely to appreciate today as US dollar retreated from its 4 week high after fresh economic data from US showed that economy is feeling the heat of aggressive rate hike. US ISM Non-Manufacturing PMI data showed activity in service sector slowed in July and data from the Labor department displayed a marked slowdown in labor costs in the second quarter. Additionally, market will remain cautious ahead of Job report from US as it could impact US Fed decision on monetary policy. US$INR is likely to face hurdle near 82.95 level and slip back till 82.50 level.

Euro and Pound Outlook

• Euro ended on positive note amid retreat in US dollar. However, sharp upside was capped on weaker than expected Eurozone PPI and PMI reports that were dovish for ECB policy. For today, EURUSD is likely to hold the support near 1.0910 level and rise back towards 1.100 level amid expectation of further correction in dollar and recovery in stock markets. However, projection of mixed batch of economic data from bloc may cap sharp upside in the single currency. EURINR may rise till 91.00 level as long as it stays above 90.40 level

• Pound is expected move north towards 1.2800 level amid retreat in dollar. However, further upside may be capped as BOE raised interest rates by 25bps, step down in pace of monetary tightening. GBPINR is likely to hold the support near 104.90 level and rise towards 105.70 levels.

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