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Rupee Outlook and Strategy

• The US dollar edged down by 0.60% on Wednesday after data showed US consumer prices rose less than expected in March, raising expectations that the Fed is likely to stop hiking rates after a possible increase in May. Further, FOMC meeting minutes indicated that banking sector stress could tip the economy into a recession

• Rupee future maturing on April 26 appreciated by 0.03% on Wednesday amid a weaker US dollar and uptick in domestic equity markets

• The rupee is likely to trade with a positive bias amid a soft US dollar as cooler than expected inflation data from US raised hopes the Fed is near the end of its hiking cycle. Meanwhile, inflation in India decelerated in March to 5.66% from 6.44% in February 2023. US$INR is expected to continue its downward trend towards the level of 82.00

Euro and Pound Outlook

• The Euro appreciated more than 0.75% yesterday and touched levels last seen in February amid weakness in the US dollar and rise in German 10 years bond yields. Further, the Euro was supported after Austrian Central Bank chief Robert Holzmann said the European Central Bank needs to keep raising interest rates and the inflation outlook alone would warrant another 50 basis point increase in May

• The Euro is expected to trade on a bullish note amid weak US dollar and uptick in German bond yields. Meanwhile, sharp upside may be restricted as the German CPI YoY data is expected to drop from 8.7% to 7.4%. EURINR is expected to continue its upward trend towards the level of 90.00

• The pound edged higher by almost 0.50% on Wednesday amid a soft US dollar and rise in UK 10 years bond yields. Additionally, sterling rose as market pricing currently indicates around a 75% chance of one more 25 basis point hike

• The pound is expected to trade with a positive bias amid a weak US dollar and rise in UK 10 year’s bond yields. Meanwhile, sharp upside may be capped as UK GDP MoM data is expected to drop from 0.3% to 0.1%. GBPINR is likely to break the level of 102 to trade in an upward trend towards the level of 102.20 for the day

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