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USD/INR

Yesterday, the USD/INR pair saw a modest uptick of 0.16%, closing at 83.11. This appreciation can be attributed to increased demand for the dollar from local oil companies and a surge in U.S. Treasury yields. The forward premiums for the rupee declined, with the 1-year implied yield dropping to 1.76%, marking its lowest level in a month. This was influenced by a reduction in expectations for U.S. rate cuts, fueled by both non-farm payrolls data and statements from Federal Reserve Chair Powell. Investors scaled back their bets on aggressive rate cuts in the U.S. On the economic front, India's services sector displayed robust growth, with the HSBC India Services PMI reaching 61.8 in January 2024, the highest in six months. The HSBC India Composite PMI, a measure of both services and manufacturing, was revised upward to 61.2, indicating the 30th consecutive month of expansion in the country's private sector. Both services and manufacturing sectors contributed to this growth, with new orders experiencing the most significant surge since mid-2023. From a technical perspective, the market is undergoing short covering, as evidenced by a 2.83% drop in open interest, settling at 2,408,713. The USD/INR is currently finding support at 83.01, and a breach below this level could lead to a test of 82.91. Conversely, resistance is anticipated at 83.22, and a breakout above this level could propel prices toward 83.33.

* USDINR trading range for the day is 82.91-83.33.

* Rupee fell weighed down by dollar demand from local oil companies and a jump in U.S. Treasury yields

* India Services PMI was revised higher to 61.8 in January 2024

* India Composite PMI was revised upward to 61.2 in January 2024

EUR/INR

Yesterday, the EUR/INR pair faced a notable decline of -0.97%, settling at 89.495. This drop was influenced by stronger-than-expected U.S. economic data and remarks from Federal Reserve Chair Jerome Powell, reinforcing a negative sentiment towards potential interest rate cuts. ECB policymaker Joachim Nagel's statement, asserting that it's premature to cut interest rates due to an unclear price outlook, added to the downward pressure on the euro. Germany reported an impressive trade surplus of EUR 22.2 billion in December 2023, surpassing market expectations and marking the largest surplus since November 2017. The trade surplus growth was attributed to a smaller decline in exports compared to imports. Despite a 4.6% month-on-month decrease in German exports to EUR 125.3 billion in December 2023, the figure was worse than market expectations of a 2% drop. Eurozone inflation eased as anticipated, reaching 2.8% in January from 2.9% in December, aligning with the ECB's 2% target.Technically, the EUR/INR market is witnessing fresh selling momentum, with a notable 40.78% increase in open interest, settling at 118,289. The pair is currently finding support at 89.38, and a breach below this level could lead to a test of 89.27. On the upside, resistance is expected at 89.68, and a breakout above this level could propel prices towards 89.87. The technical outlook suggests a bearish sentiment, with traders closely monitoring key support and resistance levels for potential market moves.

* EURINR trading range for the day is 89.27-89.87.

* Euro dropped as stronger-than-expected US economic data and another pushback from Fed further dented sentiment.

* Germany's trade surplus increased to EUR 22.2 billion in December 2023, surpassing market forecasts of EUR 18.8 billion

* Euro zone inflation dips but core figures may disappoint

GBP/INR

Yesterday, GBPINR experienced a notable decline of -1.07%, closing at 104.7, driven by a strengthening US dollar fueled by positive market sentiment. The optimism stems from the likelihood that the Federal Reserve will not implement a rate cut in March, supported by a robust labor market report. The US Bureau of Labor Statistics revealed an impressive addition of 353,000 jobs in January, surpassing both the previous figure of 333,000 and the market consensus of 180,000. Additionally, Average Hourly Earnings (YoY) exceeded expectations, rising by 4.5%. Fed Chair Jerome Powell emphasized caution in considering rate cuts, citing a strong economy. Conversely, Bank of England (BoE) Governor Andrew Bailey refrained from speculating on rate cuts, warning of potential price pressures in the second half of the year. The BoE seems focused on managing inflationary pressures over recession concerns. Chief Economist Huw Pill indicated that the optimal time for rate cuts is likely distant. Technically, the market witnessed long liquidation with a -27.44% drop in open interest, settling at 294,042. GBPINR faces support at 104.55, and a breach may lead to a test of 104.4. Resistance is anticipated at 104.93, with a move above potentially testing 105.16. The Financial Benchmark India Private Ltd set the reference rate at 105.633 for the British Pound, adding another dimension to the overall market outlook.

* GBPINR trading range for the day is 104.4-105.16.

* GBP lost ground as dollar surged after blockbuster US jobs data.

* BoE’s Huw Pill mentioned that the right time for the rate cuts is probably still some time away.

* Fed Chair Jerome Powell reiterated that the March meeting is too soon to start rate cuts.

JPY/INR

JPY/INR witnessed a significant decline of -1.04% yesterday, settling at 56.2475. The drop was fueled by a stronger-than-expected U.S. jobs report and Federal Reserve Chair Jerome Powell's reiterated commitment to a cautious approach on rate cuts. Powell, in a "60 Minutes" interview, emphasized that the Fed would proceed carefully and await sustained evidence of inflation moving down to 2%. He also indicated a slower pace of rate adjustments than what the market anticipates, dampening hopes for early U.S. interest rate cuts. In Japan, economic uncertainties persist, leading to a delay in a decision on the Bank of Japan's negative interest rate policy. Recent data reveals ongoing challenges, with subdued manufacturing activity and lower-than-expected consumer spending. The au Jibun Bank Japan Composite PMI for January 2024 was revised upward to 51.5 from a flash reading of 51.1, marking the highest reading since September. The services sector led the growth, reaching the most robust activity in four months, while the reduction in manufacturing output eased to a three-month low. Technically, the JPY/INR market is experiencing fresh selling momentum, with a notable 16.37% increase in open interest, settling at 92,110. The pair is currently finding support at 56.18, and a breach below this level could lead to a test of 56.1. On the upside, resistance is expected at 56.32, with a move above potentially testing 56.38.

* JPYINR trading range for the day is 56.1-56.38.

* JPY dropped as a stronger-than-expected US jobs report and another pushback from Fed

* The au Jibun Bank Japan Composite PMI was revised upward to 51.5 in January 2024

* The au Jibun Bank Japan Services PMI was revised higher to 53.1 in January 2024

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