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Currency Outlook:

Rupee Outlook:

• Rupee gained strength yesterday on the back of soft dollar and US treasury yields. Further, dollar sales from two large foreign banks aided the rupee.

• Rupee is likely to appreciate today amid expectation of further correction in dollar and US treasury yields. Dollar is moving south as investors await fresh economic data and statements from Fed officials to get signals on when Fed is likely to begin cutting interest rates. Meanwhile, market will remain cautious ahead of RBI monetary policy, where central bank is likely to hold rates steady for 6th consecutive time. More focus will be on statements from central bank to get hints on future monetary stance. USDINR Feb likely to face hurdle near 83.15 levels and slip back towards 82.85 levels

Euro and Pound Outlook:

• Euro rose by 0.17% yesterday amid weak dollar and hawkish statement from ECB official. ECB Executive Board member Schnabel warned against the ECB cutting interest rates too soon. Meanwhile, sharp upside was capped as German Industrial production fell more than expected in December. For today, EURUSD is likely to hold the support near 1.0750 level and rise back towards 1.0820 level amid soft dollar and rise in risk appetite in the global markets. Further, euro may move north on hawkish comments from ECB officials. EURINR Feb may rise further towards 89.80 level as long as it trades above 89.30 levels.

• Pound is expected to rise further towards 1.2680 level amid weak dollar and as rising house prices in Britain supported bets that the BOE was not likely to cut interest rates any time soon. Moreover, statements from the BOE’s Breeden also signaled that she is not in hurry to ease policy. GBPINR Feb is likely to move north towards 105.30 level as long as it stays above 104.50 levels

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