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Rupee Outlook and Strategy

* The US dollar edged higher by 1.15% yesterday amid a decline in US stocks and ahead of US FOMC meeting minutes. Additionally, improved economic data from the US supported the dollar. Data showed US construction spending unexpectedly rebounded in November due to gains in non-residential structures

* Rupee future maturing on January 27 depreciated by 0.23% tracking a strong dollar. Further, the rupee fell on FII outflows and rising concerns over a global economic slowdown

* The rupee is likely to depreciate today mainly on the back of a strong dollar and pessimistic global market sentiments. Further, investors are wary ahead of major economic data from the US and FOMC meeting minutes. ISM Manufacturing PMI data is likely to show that activity in the sector contracted for a second consecutive month. Meanwhile, softening of crude oil prices may prevent a sharp fall in the domestic pair. US$INR (January) is facing strong resistance near 83.20 levels. As long as its sustains below this level it may slip back to 82.80 levels

Euro and Pound Outlook

* The Euro depreciated by 1.11% yesterday mainly on the back of a strong dollar. Further, the Euro slipped after German inflation data showed that price pressure eased in December. Lower figures led to speculation that the ECB may slow down its pace of rate hikes and may even pause it sooner than anticipated

* The Euro is expected to trade with a negative bias on a strong dollar and risk aversion in global markets. Market sentiments were hurt on concerns over a global economic slowdown and as China’s factory activity shrank in December at the sharpest pace in nearly three years. On top of it, expectation of disappointing economic data from the euro area may hurt the single currency. EURUSD, in the past couple of days, was trading in a range of 1.06-1.07 level. It has now broken the support level of 1.0600 level and is moving towards 1.0490 levels. EURINR (January) is expected to trade in a range of 87.25-88.10

* The pound depreciated by 0.64% yesterday amid a strong dollar and disappointing economic data from Britain. UK Manufacturing PMI data showed activity in the sector contracted for a fifth consecutive month. Manufacturing PMI sank to 45.3 in December 2022 from 46.5 in November 2022 lowest since May 2009 apart from two months at the start of the pandemic in 2020

* The pound is expected to trade with a negative bias mainly on the back of strong dollar and risk aversion in global markets. Further, expectation of disappointing economic data from Britain will hurt sterling. GBPUSD is likely to fall till 1.1900 level as long as it sustains below 1.2050 level. GBPINR (January) is expected to trade in a range of 99.10-100.00

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