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Rupee Outlook and Strategy

• The US dollar moved slightly higher in choppy trade on Wednesday as New York Fed President John Williams kept up his hawkish stance on further interest rate hikes. Meanwhile, sharp upside was capped on a drop in US 10 year’s treasury yields

• Rupee future maturing on February 24 appreciated more than 0.20% after the Reserve Bank of India hiked its key repo rate by 25 bps as expected and surprised markets by leaving the door open for more tightening

• The rupee is expected to depreciate today amid rising crude oil prices and strong dollar. Further, persistent FII outflow from domestic equity markets may pressurise the rupee. Meanwhile, investors will closely watch initial jobless claims data from the US, which is expected to rise from 183,000 to 190,000. The US$INR is likely to trade towards 82.80 levels

Euro and Pound Outlook

• The Euro dropped marginally by 0.12% yesterday amid a strong dollar. Further, the Euro came under pressure on expectations that the European Central Bank may stop the tightening cycle soon due to weak economic outlook. Moreover, a drop in German 10 years bond yields weighed on the Euro

• We expect the Euro to trade with a negative bias for the day amid strong dollar and decline in German bond yields. Further, market participants will remain cautious ahead of German CPI data, which is expected to rise from 8.6% to 8.9%. EURUSD is likely to break the key support level of 1.0670 to continue its downward trend towards the level of 1.0620. EURINR (February) is expected to fall further till 88.40 levels

• The pound appreciated on Wednesday from a one-month low despite a strong US dollar. Further, traders await economic growth numbers due on Friday for clues on what the Bank of England's next move will be

• The pound is expected to trade with a negative bias for the day amid strong dollar and pessimistic global markets sentiment. GBPUSD is likely to trade towards the key support level of 80 DMA at 1.2000 as long as it sustains below 1.2100 level. GBPINR (February) is expected to drop towards the level of 99.60

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