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Currency Outlook

Rupee Outlook

* Rupee appreciated marginally yesterday amid soft dollar, rise in risk appetite in the domestic markets and FII inflows. Meanwhile, sharp gains was limited on month end dollar demand from importers. Additionally, investors remained cautious ahead of GDP data from US to get clues on interest rate outlook

* Rupee is likely to appreciate today amid expectation of further correction in dollar and US treasury yields ahead of crucial inflation report. US Core-PCE price index is forecasted to show that price pressure is ebbing, which would cement expectation of rate cut next year. US rates futures markets are now pricing in more than 100 bps of rate cuts next year starting in May. Meanwhile, investors will remain cautious ahead of OPEC+ meeting where production cuts are expected. USDINR may slip to 83.30 level as long as its stays below 83.45 levels

Euro and Pound Outlook

* Euro slipped by 0.21% yesterday amid recovery in dollar and as inflation data from Germany and Spain showed price growth slowed sharply in November. For today, EURUSD is likely to hold the support near 1.0930 levels and rise back towards 1.1020 levels amid weakness in dollar and hawkish comments from ECB officials. Meanwhile, investors will remain vigilant ahead of inflation data from euro zone to get clues on interest rate trajectory. EURINR may rally towards 91.80 as long as it trades above 91.40 levels

* Pound is likely to move north towards 1.2740 level amid weak dollar and hawkish comments from BOE policymaker. Meanwhile, sharp upside may be capped on risk aversion in the global markets. Market sentiments are hurt as Chinese manufacturing activity declined further in November, while growth in the non-manufacturing sector also deteriorated. GBPINR is likely to move higher towards 106.05 level as long a it stays above 105.50 levels

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