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Currency Outlook

Rupee Outlook

• Rupee ended weaker yesterday due to strong dollar and risk aversion in the domestic markets. Further, investors remained cautious ahead of release of GDP data from US and comments from Fed officials to get cues on interest rate outlook.

• Rupee is likely to appreciate today amid expectation of correction in dollar and US treasury yields. US Dollar and Yields are likely to move south ahead of Core-PCE price Index data, which may give fresh cues on when the Federal Reserve is likely to begin cutting interest rates. Core-PCE price index is anticipated to show price pressure continued to ebb. Additionally, US Q4 GDP was revised downward by -0.1 to 3.2%. Meanwhile, sharp gains may be prevented on pessimistic global market sentiments. USDINR March likely to slip towards 82.90 levels as long as it sustains below 83.05 levels

Euro and Pound Outlook

• Euro edged lower by 0.05% yesterday due to firm dollar and weak economic data from euro zone. Meanwhile, sharp downside was cushioned on hawkish comments from ECB Vice President Guindos and ECB Governing Council members Kazimir and Kazaks. For today, EURUSD is likely to hold the support near 1.0790 level and rise towards 1.0870 level amid expectation of correction in dollar and hawkish comments from ECB officials. Meanwhile, investors will remain cautious ahead of consumer price data from Germany, France and Spain. EURINR March may rise towards 90.30 level as long as it trades above 89.60 levels

• Pound is expected to rise further towards 1.2700 level amid expectation of correction in dollar. Meanwhile, markets await economic data, as it could affect expectations for the BOE policy path. GBPINR March is likely to move north towards 105.30 level as long as it stays above 104.70 levels

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