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Currency Outlook

• Rupee depreciated yesterday amid recovery in dollar and subdued domestic markets. Further, demand for dollar from importers weighed on rupee

• Rupee is likely to appreciate today amid weakness in dollar and softening of US treasury yields. Further, rise in risk appetite in the global markets and persistent FII inflows will lend support to domestic pair. Market sentiments have improved after major central banks signaled possible rate cuts next year. Meanwhile, investors will remain cautious ahead of housing data from US to gauge economic health of the country and get further cues on interest rate path. USDINR may slip towards 82.90 level as long as its stays below 83.20 level

Euro and Pound Outlook

• Euro gained by 0.27% yesterday amid soft dollar and hawkish comments from ECB policymakers. ECB Governing Council members Kazimir and Vasle pushed back early next year rate cut speculation. Meanwhile, sharp upside was capped as German business confidence fell unexpectedly in December. For today, EURUSD is likely to hold the support near 1.0880 level and rise back towards 1.0950 level amid weakness in dollar and hawkish comments from ECB policymakers. EURINR may rise towards 91.20 level as long as it trades above 90.60 levels

• Pound is likely to rise towards 1.2710 level amid weak dollar. Further, BOE is likely to keep rate’s higher for longer duration compared to US Fed and ECB as inflation has proved a lot more stubborn in Britain. GBPINR is likely to move north towards 105.40 level as long as it stays above 104.80 levels

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