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Currency Outlook

Rupee Outlook

• Rupee depreciated yesterday amid firm dollar and FII outflows from equity markets. Further, rise in crude oil prices and weak domestic market sentiments weighed on domestic currency

• Rupee is likely to appreciate today amid decline in US treasury yields and as Indian economy grew by 7.8% in April-June quarter of current fiscal. US treasury yields are tumbling as data showed inflation came in line with forecast, reinforcing expectations that Fed may hold interest rate steady at next policy meeting. Meanwhile, investors will remain cautious ahead of US job report and ISM Manufacturing PMI data to get more cues on interest rate outlook. US$INR is likely to face hurdle near 82.80 level and slip back towards 82.50 level

Euro and Pound Outlook

• Euro ended on negative note amid firm dollar and disappointing economic data from Germany. Additionally, CPI data showed eurozone inflation held steady this month. Moreover, euro slipped on cautious comments from ECB policymaker Isabell Schnabel. She said euro zone growth was weaker than predicted. For today, EURUSD is likely to rise back towards 1.0900 level as long as it trades above 1.0800 level amid expectation of correction in dollar and improved global market sentiments. EURINR may move back towards 90.00 level as long as it stays above 89.20 levels

• Pound is expected to hold support near 1.2610 level and strengthen back towards 1.2740 level on expectation of correction in dollar and hawkish comments from BOE chief economist Huw Pill. He said interest rates should probably stay high to quash stubbornly high core inflation. GBPINR is likely to rise towards 105.0 level as long as it trades above 104.20 level

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