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Currency Outlook

• Rupee appreciated yesterday amid weak dollar and decline in US treasury yields after US Federal Reserve signaled rate cuts in 2024. Meanwhile, investors remained cautious ahead of policy decision from BOE and ECB.

• Rupee is likely to appreciate further today amid weakness in dollar and decline in US treasury yields. Dollar slipped near 4 month low on divergence in monetary policy. Fed signaled rate cuts by 75bps next year, while ECB and BOE pushed back against bets on imminent cuts to interest rates and reaffirmed that borrowing cost would remain at record highs. Additionally, rise in risk appetite in global markets and FII inflows would support domestic pair. USDINR may face hurdle near 83.45 level and slip back towards 83.25 levels

Euro and Pound Outlook

• Euro gained more than 1% yesterday amid weak dollar and as ECB kept its policy rate steady. Further, euro rallied on hawkish comments from ECB President Lagarde, she said policymakers did not discuss interest rate cuts at meeting. For today, EURUSD is likely to edged higher towards 1.1050 levels as long as it stays above 1.0950 levels amid soft dollar and rise in risk appetite in the global markets. Further, ECB pushed back bets on interest rate cut by reaffirming that borrowing costs would remain at record highs. EURINR may rise towards 91.80 level as long as it trades above 91.20 levels

• Pound is likely to rise towards 1.2820 level amid weak dollar, optimistic global market sentiments and forecast for improved economic data from Britain. Further, BOE kept its policy rate unchanged and said rates needed to stay high for an extended period, pushing back early rate cut expectations. GBPINR is likely to move north towards 106.80 level as long as it stays above 105.90 levels

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