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Rupee Outlook and Strategy

• The US dollar appreciated by almost 0.30% on Friday amid a rise in US 10 year’s treasury yields and as investors continued to make bets on the US Federal Reserve's interest rate hiking path. Further, stronger than expected existing home sales data from the US supported dollar

• Rupee future maturing on November 28 depreciated on Friday amid a drop in domestic equity markets and rise in US dollar index. However, sharp depreciation was prevented on weakness in crude oil prices

• The rupee is expected to trade with a negative bias for the day amid strong dollar and pessimistic global market sentiments. Further, statements of Fed officials signalled that central bank would continue to lift rates to combat inflation. However, a sharp fall in the rupee may be prevented on softening of crude oil prices. US$INR (November) is likely to continue its uptrend towards 82.00 level

Dollar Index vs US$INR

Euro and Pound Outlook

• The Euro edged lower by almost 0.40% on Friday amid a rise in the US dollar. However, sharp downside was cushioned after three top policymakers said. The European Central Bank must raise interest rates high enough to dampen growth as it fights sky-high inflation. It could soon start running down its €5 trillion ($5.2 trillion) debt pile

• The Euro is expected to trade with a negative bias amid a strong dollar and pessimistic global market sentiments. Further, investors will take cues from economic data from the euro area. However, sharp downside may be cushioned in anticipation that the ECB will hike interest rates to fight double digit inflation. Additionally, some policymakers argued for the need to start winding down bank’s massive pile of government debt. EURUSD is likely to break key support level of 1.0280 to continue its downward trend towards the level of 1.0260. EURINR is likely to continue its downtrend towards the level of 84.40

• The pound appreciated on Friday amid stronger than expected retail sales data from Britain. Retail sales in the UK increased 0.6% MoM in October 2022. This is compared to market forecasts of a 0.3% rise. Increases were seen in all main sectors apart from food stores. Further, a rise in UK 10 years bond yields supported the sterling

• The pound is expected to trade with a negative bias for the day amid a strong dollar and risk aversion in global markets. Meanwhile, market participants will focus on BoE MPC member Cunliffe’s speech for further cues on monetary tightening. GBPUSD is likely to break its key support level at 1.1830 to start its downward trend towards the level of 1.1760. GBPINR (November) is expected to trade towards the level of 96.90

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