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Currency Outlook:

Rupee Outlook:

• Rupee ended little changed yesterday ahead of Inflation data from India and US. Further, rupee gave up most of its early gains amid uptick in dollar, surge in crude oil prices and risk aversion in the domestic market.

• Rupee is likely to appreciate today amid expectation of correction in dollar and US treasury yields. Dollar and Yields may move south on forecast that price pressure continued to ebb in US, giving room for Fed to start cutting rates this year. Furthermore, Indian economy showed signs of resilience as industrial production rose and inflation eased. Data showed India’s inflation eased to 5.1% in January and remained under RBI tolerance range of 2%-6%. Meanwhile, sharp gain’s may be prevented on pessimistic global markets sentiments and rise in crude oil prices. USDINR Feb likely to slip towards 82.85 levels as long as it sustains below 83.15 levels

Euro and Pound Outlook:

• Euro slipped by 0.10% yesterday due to firm dollar and dovish comments from ECB Governing Council member Panetta. Panetta signaled that ECB will have to start cutting interest rates soon. For today, EURUSD is likely to rise back towards 1.0810 level as long as it stays above 1.0740 level amid expectation of correction in dollar ahead of inflation data from US, which may provide clues on when Fed may begin widely anticipated interest rate cuts. Additionally, forecast of upbeat economic data from euro area will aid single currency. EURINR may rise towards 89.70 level as long as it trades above 89.20 levels

• Pound is expected to rise towards 1.2660 level amid expectation of correction in dollar. Meanwhile, investors will remain vigilant ahead of job data from Britain to get cues on interest rate outlook. GBPINR is likely to move north towards 105.0 level as long as it stays above 104.40 levels

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