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Rupee Outlook and Strategy

• The US dollar index edged higher on Friday amid better-thanexpected jobs data from the US, potentially giving the Federal Reserve more leeway to keep hiking interest rates. The unemployment rate in the US inched lower to 3.4% in January 2023, the lowest level since May 1969 and below market expectations of 3.6%. Further, a rise in US 10 year treasury yields supported dollar

• Rupee future maturing on February 24 appreciated by 0.32% amid an uptick in domestic equity markets

• The rupee is expected to appreciate today amid softening of crude oil prices and rise in risk appetite in domestic markets. Meanwhile, sharp upside may be prevented on strong dollar and persistent FII outflows. Additionally, investors will now closely watch RBI’s monetary policy scheduled on February 8, where the central bank may hike rates by 25 bps. The US$INR is likely to break the key support level of 81.85 to continue trading towards the level of 81.75

Euro and Pound Outlook

• The Euro depreciated more than 1.00% on Friday amid a strong dollar. Meanwhile, further downside was restricted by stronger-than-expected services PMI numbers. The Eurozone services PMI came in at 50.8 in January 2023, little-changed from a preliminary estimate of 50.7 and above the previous month's 49.8, pointing to the first month of expansion in the sector since July 2022

• We expect the Euro to trade with a negative bias for the day amid a strong dollar. Further, traders will closely watch eurozone retail sales data and German factory orders data. Retail sales is expected to decline by 2.4% in December 2022. EURUSD is likely to break the key support level of 1.0740 to continue its downward trend towards the level of 1.0700. EURINR (February) is likely to drop towards 89.40 levels

• The pound fell by nearly 1.50% on Friday amid a strong dollar. Meanwhile, betterthan-expected services PMI data from the UK and uptick in 10 year’s government bond yields prevented further downside. The UK services PMI was revised higher to 48.7 in January 2023 from a preliminary estimate of 48

• The pound is expected to trade with a negative bias for the day amid a strong dollar and risk aversion in global markets. Market sentiments were hurt as monthly job report from the US signalled a strong labour market, stoking fears that interest rate hikes may continue longer than expected. Meanwhile, market participants will closely watch construction PMI data from Britain, which is expected to rise from 48.8 to 49.6. GBPUSD is likely to break the key support level of 1.1950 to continue its downward trend towards the level of 1.1890. GBPINR (February) is expected to decline towards the level of 99.90

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