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Currency Outlook

Rupee Outlook

• Rupee recovered yesterday amid IPO-related inflows and as dollar hovered near to its lowest level in nearly 3-months. However, persistent local demand for dollar weighed on domestic currency. Additionally, investors remained cautious ahead of major economic data from US

• Rupee is likely to appreciate today amid optimistic domestic market sentiments and softening of crude oil prices. However, sharp gains may be capped as fresh economic data from US made investors to dial back expectations of Fed rate cuts in first half of 2024. A survey from the University of Michigan showed consumers this month anticipate higher inflation both in the near and long term. USDINR may slip to 83.20 level as long as its stays below 83.45 levels

Euro and Pound Outlook

• Euro slipped by 0.21% yesterday amid strength in dollar after better than expected economic data from US. Further, dovish comments from ECB Vice President Guindos weighed on single pair. For today, EURUSD is likely to hold the support near 1.0850 and rise back towards 1.0950 level amid expectation of improved economic data from euro zone. Meanwhile, sharp upside may be capped as Bundesbank President Nagel said we are close to the level seen as terminal rate, and ECB interest rates will stay where they are for a while. EURINR may rally back towards 91.20 as long as it trades above 90.70 levels

• Pound is likely to move north towards 1.2550 level amid surge in UK bond yields. Yields on gilts rose after Hunt's statement, as investors reacted to a much smaller cut than expected to gilt issuance plans. Meanwhile, trading volume is expected to remain thin due to holidays in Japan and the US. GBPINR is likely to move higher towards 104.60 level as long a it stays above 104.10

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