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Currency Outlook

Rupee Outlook

• Rupee depreciated yesterday amid surge in crude oil prices and as FII were net sellers in the equity markets. Additionally, demand for dollar from importers also hurt domestic pair.

• Rupee is likely to appreciate today amid softness in dollar and decline in US treasury yields. Dollar is moving south ahead of core-PCE price index data, as it would provide more clarity on whether inflation has slowed enough for Fed to begin cutting rates next year. Additionally, investors continue to digest comments from Fed officials for indication when US central bank is likely to begin cutting rates. Further, rise in risk appetite in the global markets and persistent FII inflows will lend support to domestic pair. USDINR may slip towards 83.05 level as long as its stays below 83.30 level

Euro and Pound Outlook

• Euro gained by 0.52% yesterday amid weak dollar and hawkish comments from ECB policymakers. ECB Governing Council members Kazaks and Simkus pushed back early next year rate cut speculation. For today, EURUSD is likely to hold the support near 1.0930 level and rise back towards 1.1020 level amid soft dollar and rise in risk appetite in the global markets. Further, hawkish comments from ECB policymakers will continue to support single currency. Meanwhile, expectation of weak economic data from euro zone may prevent sharp rally in the pair. EURINR may rise towards 91.40 level as long as it trades above 90.80 levels

• Pound is likely to rise towards 1.2770 level amid weak dollar and on hopes that BOE will hold rates higher for longer. Moreover, investors will keep an close eye on CPI data from Britain to get more clarity on interest rate outlook. GBPINR is likely to move north towards 106.20 level as long as it stays above 105.50 levels

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