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Rupee Outlook and Strategy

• The US dollar advanced to a four-week high on Monday, as last week's stronger than expected US jobs report raised prospects of the US Federal Reserve keeping on with its inflation-fighting interest rate hikes for longer. Further, the dollar was supported by sharp rise in US 10 year’s treasury yields

• Rupee future maturing on February 24 depreciated to a one-month low on FII outflows from domestic equity markets and strong dollar

• The rupee is expected to depreciate today amid strong dollar and rise in crude oil prices. Further, the rupee may be pressurised on persistent FII outflows from domestic equity markets. In the meantime, investors are now awaiting the Reserve Bank of India’s policy decision on Wednesday, where a 25 basis-point hike is largely expected. The US$INR is likely to move towards the level of 83.10 for the day

Euro and Pound Outlook

• The Euro continued to fall on Monday amid strong dollar and risk aversion in global markets. Further, the Euro was pressurised after data showed retail sales in the Euro Area declined 2.7% MoM in December 2022, the biggest decline since April 2021, in a sign that rising prices and interest rates are weighing on consumer spending

• We expect Euro to trade with a negative bias for the day amid a strong dollar and pessimistic global market sentiments. Further, market participants will closely watch German industrial production data, which is expected to drop from 0.2% to -0.6%. EURUSD is likely to break the key support level of 1.0680 to continue its downward trend towards the level of 1.0650. EURINR (February) is likely to drop towards 88.80 levels

• The pound fell to a one-month low yesterday amid rise in dollar and weak global markets sentiments. Further, it slipped as UK construction PMI dropped to 48.4 in January 2023, signalling the sharpest decline in construction output since May 2020 largely due to weaker client demand and fewer new projects starts in recent months

• The pound is expected to trade with a negative bias for the day amid strong dollar and risk aversion in global markets. Further, traders will remain cautious ahead of the Halifax house price index YoY data, which is expected to drop from 2.0% to -0.3%. GBPUSD is likely to break the key support level of 1.2000 to continue its downward trend towards the level of 1.1950. GBPINR (February) is expected to decline towards the level of 99.20

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