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Rupee Outlook and Strategy

• The US dollar ended modestly higher on Friday on risk aversion in global markets and uptick in US treasury yields. Market sentiments were hurt as investors worried about the risk of recession with the prospect that borrowing cost still have a long way to climb. Also, risk appetite soured on disappointing economic data from country

• Rupee future maturing on December 28 depreciated marginally by 0.01% on Friday tracking a strong dollar and weak global market sentiments

• The rupee is likely to depreciate today on the back of a strong dollar and pessimistic global market sentiments. Market sentiments were hurt as aggressive monetary tightening policy of major central banks to tame inflation is weighing on economic growth. Manufacturing and services PMI data across major countries signalled contraction in activity. Meanwhile, softening of crude oil prices may prevent sharp fall in domestic currency. US$INR (December) is expected to trade in a range of 82.50-83.00

Euro and Pound Outlook

• The Euro slipped by 0.40% on Friday amid a strong dollar and weak global market sentiments. Further, Euro Area Manufacturing and Services PMI data showed activity in both sectors contracted. However, a sharp fall was cushioned as ECB has raised its benchmark interest rate by 50 bps and signalled the bank will continue to increase rates to tame inflation

• The Euro is expected to trade with a negative bias mainly on the back of a strong dollar and risk aversion in global markets. Additionally, a series of disappointing economic data from the euro area fuelled worries among investors that the region is slipping into recession. EURUSD is facing resistance near 1.0670 levels. As long as it sustains below this level, it may slip back to 1.0500 levels. EURINR (December) is expected to trade in a range of 87.40-88.00

• The pound slipped further on Friday amid a strong dollar and weak global market sentiments. Further, UK manufacturing PMI data showed activity in the sector contracted for a fifth consecutive month. On top of this, British retail sales declined 0.4% in November showcasing the stress felt by many households as the cost-ofliving crisis ate into their finances

• The pound is expected to trade with a negative bias mainly on the back of a strong dollar and pessimistic global market sentiments. Additionally, expectation of disappointing economic from Britain is expected to hurt the sterling. Moreover, BoE was the only major central bank that signalled caution about raising rates much higher, saying it believed the UK economy was already in recession. GBPUSD is likely to slip back till 1.2030 level as long as it sustains below 1.2250 level. GBPINR (December) is expected to trade in a range of 100.0-100.70

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