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Rupee Outlook and Strategy

* The dollar edged higher by 0.36% on Friday amid a pessimistic global economic outlook. High inflation and a rush by central banks to raise rates and stem the flow of cheap money has fuelled sell-offs across markets. However, sharp upside was prevented by weak manufacturing PMI data. The ISM manufacturing PMI fell to 53 in June from 56.1 in May, below market forecasts of 54.9 and pointing to the slowest growth in factory activity since June of 2020

* US$INR futures maturing on July 27 dropped 0.05% on Friday amid rise in domestic indices

* The rupee is expected to depreciate today amid strong dollar and rise in crude oil prices. Further, concerns over weak domestic growth may hurt rupee. US$INR is expected to trade in the range of 79.00 to 79.30

Dollar Index Vs US$INR

Euro and Pound Outlook

* The Euro slipped by 0.54% on Friday amid strong dollar. Further, the Euro was pressurised by weak German manufacturing PMI data. The German Manufacturing PMI fell to 52 in June from 54.8 in May, pointing to the slowest growth in factory activity since July 2020. However, further downside was restricted by rise in euro area CPI YoY data. Annual inflation rate in the euro area increased to a new record high of 8.6% in June from 8.1% in May, compared to market expectations of 8.4%, strengthening the case for the ECB's first rate hike in 11 years in July

* The Euro is expected to trade with a negative bias today amid strong dollar. Further, investors will remain vigilant ahead of Spanish unemployment change and German trade balance data, as German trade balance is expected to drop from 3.5 bn to 2.7 bn. EURUSD is expected to surpass the hurdle of 1.0400 to continue its downward trend towards level of 1.0350. EURINR is likely to trade in the range of 83.00 to 82.40

* The pound depreciated by 0.68% on Friday amid strong dollar and renewed fears of a recession. Further, pound was pressurised by weak manufacturing PMI data. The UK manufacturing PMI fell to a two year low of 52.8 in June from 54.6 in May. Figures were revised lower from an initial estimate of 53.4. Output growth ground to a near standstill pace and new orders contracted for the first time in 17 months

* The pound is expected to trade with a negative bias today amid strong dollar and concerns over weak economic growth. GBPUSD is expected to break the hurdle of 1.2045 to continue its downward trend towards the level of 1.1980. GBPINR is likely to trade in the range of 95.60 to 94.80.

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