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Rupee Outlook and Strategy

* US dollar retreated from its 14-month high and declined 0.03% on Friday mainly on a rise in risk appetite in the global markets and as US Fed Chair Powell said he was in no rush to hike interest rates. However, a sharp fall was prevented on upbeat job data and as US central bank announced $15 billion monthly tapering

* Rupee future maturing on November 26 appreciated by 0.12% in Thursday’s trading session on softening of crude oil prices and rise in risk appetite in the domestic markets

* The rupee is expected to depreciate today on strong dollar and surge in crude oil prices. Dollar is gaining strength on stronger job data and as US Federal Reserve announced its asset tapering. Additionally, crude oil prices may rise on renewed supply concerns after Opec+ producers agreed to stick to their plan of raise oil output by 400,000 barrels per day. However, a sharp fall may be prevented on IPO related inflows

Euro and Pound Outlook

* Euro appreciated by 0.12% on Friday mainly on the back of weakness in dollar and surge in stock markets. However, sharp upside was capped on disappointing economic data from euro area and divergence in monetary policy. German Industrial production decline by 1.1% in September 2021 compared to expectation of positive growth of 1.1%

* Euro is expected to trade with negative bias on strong dollar and divergence in monetary policy. Further, expectation of disappointing economic data from euro area may hurt single currency. Series of weak economic data from euro area may fuel the worries over slowdown in economy. However, sharp downside may be cushioned on rise in risk appetite in the global markets. Market sentiments may improve as US Democrats passed $1 trillion infrastructure bill sending it to President Biden to sign into law. EURINR (November) is expected to trade in a range of 86.10-86.60

* The pound depreciated by 0.03% on Friday as Bank of England left its benchmark interest rates unchanged so that they could assess the impact on unemployment levels of the recent end to furlough scheme. Out of nine members 7 voted to keep rates at its all time low. Further, negative news on Brexit front weighed on currency

* The pound is expected to trade with negative bias on strong dollar and worries over post-Brexit quarrel with EU over Northern Ireland trading arrangements. Additionally, Bank of England squashed market expectations by keeping benchmark interest rates unchanged. However, sharp downside may be cushioned on rise in risk appetite in the global markets. As long as GBPINR (November) sustains below 101.20 it may slip further till 100.60

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