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Rupee Outlook and Strategy

• The US dollar slipped after Bank of Japan (BoJ) shocked markets with a surprise tweak to its bond yield programme. BoJ decided to let long term yields move 50 bps on either side of its 0% target, wider than 25 bps band previously. Additionally, disappointing housing data added downside pressure. However, a surge in US treasury yields prevented a further fall in the dollar

• Rupee future maturing on December 28 depreciated by 0.10% yesterday amid risk aversion in domestic markets and rise in crude oil prices

• The rupee is likely to appreciate today tracking weakness in dollar. Meanwhile, sharp gains may be prevented on pessimistic global market sentiments and re-bounce in crude oil prices. Additionally, market participants will keep an eye on major economic data from the US to gauge the economic health of the country. US$INR (December) is facing strong resistance near 82.97. As long as it sustains below this level it may slip further till 82.50

Euro and Pound Outlook

• The Euro rallied by 0.14% yesterday on the back of a weak dollar and improved economic data from the euro area. Further, ECB policymakers in their speeches reiterated that the central bank is still a long way from hitting their inflation goal and the bank needs to be persistent on rate hikes

• The Euro is expected to trade with a positive bias, mainly on the back of weakness in the dollar. Further, expectations of improved economic data from Germany may support the single currency. However, sharp upside may be capped on weak global market sentiments and on rising fears that region is slipping into recession. EURUSD is holding support near 1.0550 levels. As long as it sustains above this level, it may rise back to 1.0700 levels. EURINR (December) is expected to trade in a range of 87.60-88.40

• The pound appreciated by 0.31% yesterday amid weakness in the dollar and positive domestic markets. However, sharp upside was capped as households and business face a cost of living crisis

• The pound is expected to trade with a positive bias, mainly on the back of weakness in the dollar. Meanwhile, weak global market sentiments and expectation of disappointing economic from Britain are expected to prevent sharp upside in the sterling. GBPUSD is likely to rise back till 1.2300 level as long as it sustains above 1.2100 level. GBPINR (December) is expected to trade in a range of 100.40-101.30

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