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Rupee Outlook and Strategy

• US dollar index edged up on Thursday, recovering from a 10-month low amid a surprise decline in weekly jobless claims, which showed the number of Americans filing new claims for unemployment benefits fell to 183,000, the lowest since April and well below market expectations of 200,000

• Rupee future maturing on February 24 depreciated by 0.34% and closed at a more than three-week low amid FII outflow from the domestic markets

• The rupee is likely to depreciate today amid strong dollar and persistent FII outflow from domestic markets. Further, investors will closely watch key macroeconomic data from India like Nikkei services PMI data, which is expected to drop from 58.5 to 58.1. US$INR is likely to surpass the hurdle of 82.37 to continue trading towards 82.50 levels

Euro and Pound Outlook

• The Euro fell from a nine-month high on Thursday amid strong dollar. Further, the Euro was pressurised after the data showed Germany's trade surplus fell in December compared to the previous month as both exports and imports declined sharply, reflecting continued weakness in global demand and lower energy prices. Meanwhile, further downside was prevented as the European Central Bank raised interest rates by 50 bps and signalled at least one more hike of the same magnitude next month

• We expect the Euro to trade with a negative bias for the day amid strong dollar and decline in the German 10 year bond yields. Further, traders will stay vigilant ahead of the key macroeconomic data from the euro area like services PMI and global composite PMI. EURUSD is likely to break the key support level of 1.0850 to continue its downward trend towards the level of 1.0800. EURINR (February) is likely to drop towards the 90.10 levels

• The pound depreciated by 1.20% yesterday after the Bank of England raised its interest rate by 50 basis points to 4.00% in its 10th straight hike while hinting that rates were near their peak. Further, the sterling was pressurised by a strong dollar and sharp drop in UK 10 year bond yields.

• The pound is expected to trade with a negative bias for the day amid strong dollar and sharp decline in UK 10 year bond yields. Further, market participants will closely watch services PMI and composite PMI data from the UK to gauge economic health of the country. GBPUSD is likely to break the key support level of 1.2180 to continue its downward trend towards the level of 1.2120. GBPINR (February) is expected to drop towards the level of 100.90

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