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USDINR

USDINR trading range for the day is 78.8-79.43.

USDINR settled flat as the country battles with accelerating inflation, worsening external finances and persistent capital outflows.

The government hiked import duty on gold and raised export taxes on gasoline and diesel to tame the fast-widening current account gap.

India manufacturing growth eases to 9-month low

Market Snapshot

USDINR yesterday settled down by -0.04% at 79.0975 as the country battles with accelerating inflation, worsening external finances and persistent capital outflows. Higher crude oil and commodity prices, and a sudden surge of gold imports in May and June have significantly widened India’s trade gap and in turn current account deficit. Meanwhile, the government hiked import duty on gold and raised export taxes on gasoline and diesel to tame the fast-widening current account gap. As a result, stocks of heavyweight domestic energy exporters tumbled, bringing down the benchmark index and causing a further decline in rupee. Further, a stronger dollar and weak domestic growth prospects have led foreign investors to pull out more than $32 billion from Indian equities in the last one year, making the currency the worst performer in Asia after Taiwan. The S&P Global India Manufacturing declined to 53.9 in June 2022 from 54.6 in May, below market consensus of 54.5, pointing to the weakest growth in the sector since last September. Both output and new orders grew for the twelfth straight month, with the rate of expansion easing to nine-month lows. Goods and services tax (GST) collections in June stood at Rs 1,44,616 crore, driven by economic recovery and anti-evasion drives such as action against fake billers, according to an official statement. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the USD at 79.094 Technically market is under fresh selling as market has witnessed gain in open interest by 0.32% to settled at 4809242 while prices down -0.0325 rupees, now USDINR is getting support at 78.95 and below same could see a test of 78.8 levels, and resistance is now likely to be seen at 79.26, a move above could see prices testing 79.43.

EURINR 

EURINR trading range for the day is 82.36-83.32.

Euro recovered against the dollar, which sputtered after fresh inflation data showed U.S. consumer spending rose less than expected in May.

The European Central Bank is expected to raise interest rates in July for the first time in a decade to try to cool accelerating inflation.

Fresh euro zone data showed French inflation climbed to a record high of 6.5% in June

Market Snapshot

EURINR yesterday settled up by 0.45% at 82.8225 recovering against the dollar, which sputtered after fresh inflation data showed U.S. consumer spending rose less than expected in May. The European Central Bank is expected to raise interest rates in July for the first time in a decade to try to cool accelerating inflation. Markets will now look to euro zone inflation figures due on Friday to get a better sense of how aggressive the ECB might be in hiking rates. Fresh euro zone data showed French inflation climbed to a record high of 6.5% in June, while Greece cut its growth forecast to 3.2% this year from 3.8%. Euro zone unemployment fell to a new record low in May as the economy continued to rebound from the COVID-19 pandemic, even if inflation exacerbated by Russia's invasion of Ukraine is expected to dampen growth. Confidence in the currency bloc was also dented after ECB President Lagarde said that she believes it is unlikely that the Eurozone will go back to an environment with low inflation. The ECB’s chief had confirmed a 25bps rate hike in July after multiple ECB policymakers called for a steeper increase. Conversely, Cleveland Fed President Mester backed a 75bps rate hike in the Fed’s next meeting should economic conditions remain unchanged. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the Euro at 82.7392 Technically market is under short covering as market has witnessed drop in open interest by -10.02% to settled at 97026 while prices up 0.37 rupees, now EURINR is getting support at 82.59 and below same could see a test of 82.36 levels, and resistance is now likely to be seen at 83.07, a move above could see prices testing 83.32.

GBPINR

GBPINR trading range for the day is 94.79-96.53.

GBP dropped as renewed fears of a global recession coupled with weak UK economic data sent investors rushing to sell the British currency.

The S&P Global/CIPS UK Manufacturing PMI fell to a two-year low of 52.8 in June of 2022 from 54.6 in May.

Data showed Britain racking up a record shortfall in its current account in the first three months of this year

Market Snapshot

GBPINR yesterday settled down by -0.46% at 95.395 as renewed fears of a global recession coupled with weak UK economic data sent investors rushing to sell the British currency. While uncertainty over the N. Ireland protocol and softening expectations about the scope of the Bank of England’s tightening outlook also harmed the pound. Official data revealing a record shortfall in the United Kingdom's current account deficit in early 2022. But as British central bankers grapple with the task of taming inflation while avoiding a severe economic downturn, the currency remains on course for its biggest six-month drop against the U.S. dollar since 2016, the year of the Brexit referendum. Data showed Britain racking up a record shortfall in its current account in the first three months of this year, as the deficit ballooned to 51.7 billion pounds ($62.8 billion) or 8.3% of gross domestic product. The BoE has hiked interest rates five times since December and its next scheduled rates announcement is on Aug. 4, with some market players expecting a bigger hike of 50 bps at the next meeting. Inflation hit a 40-year record of 9.1% last month, the highest level of the G7 countries. Consumer credit in the United Kingdom increased by GBP 0.844 billion in May of 2022, following a downwardly revised GBP 1.377 billion gain in May. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the British Pound was fixed at 95.9563 Technically market is under fresh selling as market has witnessed gain in open interest by 8.25% to settled at 93096 while prices down -0.445 rupees, now GBPINR is getting support at 95.09 and below same could see a test of 94.79 levels, and resistance is now likely to be seen at 95.96, a move above could see prices testing 96.53.

JPYINR

JPYINR trading range for the day is 58.19-59.13.

JPY rose as worries about the risk of a global recession drove rallies in the safe haven.

The Bank of Japan's index for big manufacturers' sentiment fell to 9 in the second quarter of 2022 from 14 in the previous quarter

The Bank of Japan remains the only major central bank that has maintained ultra-easy policies

Market Snapshot

JPYINR yesterday settled up by 0.79% at 58.6275 as worries about the risk of a global recession drove rallies in the safe haven. The Bank of Japan's index for big manufacturers' sentiment fell to 9 in the second quarter of 2022 from 14 in the previous quarter, hit by rising input costs and supply disruptions caused by the war in Ukraine and China's strict COVID-19 lockdowns. The latest figure also came in below expectations for a reading of 13 and hit the lowest since March 2021. The Bank of Japan remains the only major central bank that has maintained ultraeasy policies at a time other major economies are racing ahead with interest rate hikes to combat surging inflation. The BOJ left its key short-term interest rate unchanged at -0.1%, and the one for 10-year bond yields around 0% at its June meeting, as widely expected. The board also said it would offer to buy unlimited amounts of the bonds to defend an implicit 0.25% cap every day, repeating the guidance on market operations it made in April. Moreover, Governor Haruhiko Kuroda stressed the need to maintain its ultra-loose monetary policy as the economy has not been affected much by the global inflationary trend, as country's 15-year experience with deflation is keeping wage growth subdued. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the Japanese Yen at 58.62 Technically market is under short covering as market has witnessed drop in open interest by -19.79% to settled at 49146 while prices up 0.46 rupees, now JPYINR is getting support at 58.41 and below same could see a test of 58.19 levels, and resistance is now likely to be seen at 58.88, a move above could see prices testing 59.13.

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