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Currency Outlook

Rupee Outlook

• Rupee depreciated on Friday amid strong dollar and elevated US treasury yields. Further, market participants remained cautious ahead of Powell speech at Jackson hole Symposium to get the hint on rate trajectory

• Rupee is likely to appreciate today amid retreat in dollar and rise in risk appetite in the global markets. Dollar is easing from its 12-week high as US Fed Chair Powell promised to move carefully at upcoming meetings as he noted both progress made on easing price pressure as well as risk from surprising strength of US economy. As per CME FedWatch tool market anticipates an 80% chance of Fed standing pat next month. US$INR is likely to face hurdle near 82.75 level and move south towards 82.45 levels

Euro and Pound Outlook

• Euro ended on negative note amid strong dollar and as German Ifo business climate fell more than expected to 10-month low. For today, EURUSD is likely to rise further towards 1.0840 level as long as it trades above 1.0760 level amid soft dollar and on hawkish comments from ECB President Lagarde. She said central bank will set interest rate at sufficiently restrictive levels for as long as necessary. EURINR may move north towards 89.50 level as long as it stays above 88.90 levels

• Pound is expected to hold support near 1.2540 level and strengthen towards 1.2650 level on soft dollar and hawkish comments from BOE Deputy Governor Ben Broadbent. He said interest rate in UK might have to stay elevated for some time yet. GBPINR is likely to rise towards 104.50 level as long as it trades above 103.70 levels

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