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Rupee Outlook and Strategy

• The US dollar rallied yesterday amid risk aversion in global markets and rise in US treasury yields. Market sentiments were hurt on worries that rising Covid-19 cases in China and monetary tightening across major countries to combat soaring inflation would hamper the global economic recovery. Additionally, hawkish statement from Fed official supported the dollar

• Rupee future maturing on November 28 depreciated by 0.06% yesterday on the back of a strong dollar and weak global market sentiments

• The rupee is expected to trade with a negative bias on pessimistic global market sentiments and strong dollar. Market sentiments were hurt as investors fear that fresh Covid-19 curbs in China may severely impact economic activity in the Chinese economy. Meanwhile, consistent FII inflows and softening of crude oil prices may support the rupee. US$INR (November) is expected to trade in the range of 81.60- 82.05

Dollar Index vs US$INR

Euro and Pound Outlook

• The Euro slipped yesterday mainly on the back of a strong dollar and risk aversion in global markets. Additionally, PPI data from Germany surprised the market as it fell by 4.2%, its first monthly fall in two and a half years. Decline in producer prices raised hopes that double digit inflation in the German economy could be nearing its peak

• The Euro is expected to trade with a negative bias amid a strong dollar and pessimistic global market sentiments. However, a sharp fall in single currency may be prevented on expectations of improved economic data from the euro area. EURUSD is facing a strong resistance near 1.0340 levels. As long as it sustains below this level, the EURUSD may slip back to 1.0190 levels

• The pound depreciated yesterday amid a strong dollar and risk aversion in global markets. Further, investors are worried over escalating fears of a hard Brexit. UK Prime Minister Rishi Sunak said Britain is not prepared to align itself with EU laws as part of its post-Brexit relationship

• The pound is expected to trade with a negative bias mainly on the back of a strong dollar and gloomy global market sentiments. Additionally, the market will remain cautious ahead of economic data to get cues on the economic health of the country. GBPUSD is facing strong resistance near 1.1900 level. As long as it sustains below this level, the pound may slip back to 1.1750 levels. GBPINR (November) is expected to trade in a range of 96.70-97.25

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