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Rupee Outlook and Strategy

• US dollar rallied on Friday amid weak global market sentiments and rise in US treasury yields. Further, PPI data from US stirred hopes that inflation is moderating but also raised fears that Fed will need to keep rates higher for longer

• Rupee future maturing on December 28 appreciated by 0.15% on Friday tracking weak dollar and decline in crude oil prices. Meanwhile, pessimistic global market sentiments and FII outflows prevented further gains in rupee

• Rupee is likely to appreciate today on the back of weakness in dollar and softening of Crude oil prices. Additionally, rupee may gain strength on the back of expectation of improved economic data from country. India's CPI data is likely to show that inflation eased to 6.4% in November from 6.77% in October 2022. However, sharp gains may be prevented on weak global market sentiments and FII outflows. USDINR (Dec) is facing strong resistance near 82.70 as long as it sustains below this level pair may move south to 82.25 level

Euro and Pound Outlook

• The Euro slipped on Friday amid a rebound in the dollar and risk aversion in global markets. Further, it was a quiet session due to lack of economic data from eurozone and as traders remained cautious ahead of ECB monetary policy scheduled next week

• The Euro is expected to trade with a positive bias amid a weak dollar. Meanwhile, sharp upside may be capped on risk aversion in global markets. Market sentiments were hurt on concerns about how high interest rates may go and impact economic growth. Investors will remain cautious ahead of ECB monetary policy scheduled this week, where the central bank is expected to hike rates to put the brakes on growth to curb inflation. EURUSD is taking support near 1.0470 levels. As long as it sustains above this level, the EURUSD may rally back to 1.0600 levels. EURINR (December) is expected to trade in a range of 86.70-87.30

• The pound appreciated on Friday on news that the British government announced reforms designed to maintain London as one of the most competitive financial hubs in the world. However, sharp upside was capped on a strong dollar and risk aversion in global markets

• The pound is expected to trade with a positive amid a weak dollar and expectation of improved economic data from Britain. UK GDP data is likely to show that economy expanded by 0.4% in October 2022 compared to 0.6% contraction in September. Meanwhile, investors will remain cautious ahead of BoE’s monetary policy scheduled this week, where the central bank is likely to increase interest rate to curb inflation. Investor will also focus on statements to get fresh direction cues. GBPUSD is holding support near 1.2150 level. As long as it sustains above this level the pound may rally to 1.2350 levels. GBPINR (December) is expected to trade in a range of 100.70-101.50

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