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Rupee Outlook and Strategy

• The US dollar slipped on Friday amid a rise in risk appetite in global markets. Market sentiments improved after data showed inflation is moderating in the US, reinforcing expectations of smaller rate hikes from the Fed. Core PCE Price Index rose 4.7% in November compared to 5% in October. However, sharp downside was cushioned on a surge in US treasury yields

• Rupee future maturing on December 28 depreciated by 0.08% on Friday tracking firm dollar and rise in crude oil prices. Further, the rupee was hurt on FII outflows and risk aversion in domestic markets

• The rupee is likely to appreciate today mainly on the back of a weak dollar and rise in risk appetite in Asian markets. However, a surge in crude oil prices may prevent sharp gains in domestic currency. Also, as the holiday season started market volume may remain thin. US$INR (December) is facing strong resistance near 83.00 level. As long as it sustains below this level it may slip back to 82.55 level

Euro and Pound Outlook

• The Euro edged up by 0.21% on Friday, mainly on the back of optimistic global markets and a weak dollar. Additionally, hawkish statement from an ECB policymaker and improved economic data from the euro area supported the single currency

• The Euro is expected to trade with a positive bias on the back of a weak dollar and hawkish statements from ECB officials. EURUSD is holding support near 1.0570 levels. As long as it sustains above this level, it may rise back to 1.0660 levels. EURINR (December) is expected to trade in a range of 87.40-88.00

• The pound appreciated by 0.14% on Friday amid weakness in dollar but was still set for its third straight weekly drop. Additionally, a rise in risk appetite in global markets supported sterling. Market sentiments improved on bets that a slowdown in US inflation may prompt the Fed to soon stop raising interest rates

• The pound is expected to trade with a positive bias amid weakness in the dollar. Meanwhile, concerns over double digit inflation, slowing growth and swelling current account deficit are expected to hurt the pound. GBPUSD is likely to rise back till 1.2120 level as long as it sustains above 1.2020 level. GBPINR (December) is expected to trade in a range of 99.50-100.20

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