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Currency Outlook

Rupee Outlook

• Rupee appreciated yesterday amid weak dollar and rise in risk appetite in the domestic markets. Further, rupee tracked strength in other Asian currencies.

• Rupee is likely to depreciate today amid recovery in dollar and rise in US treasury yields. Dollar and Yields moved up after better than expected economic data from US showed that economy is resilient, reinforcing expectations that interest rate cuts by Fed will be pushed out to June or later this year. Additionally, surge in crude oil prices may hurt domestic pair. Meanwhile, optimistic domestic market sentiments and dollar inflows into the domestic share and bond markets may prevent sharp fall in Rupee. USDINR Feb likely to rise back towards 83.00 levels as long as it sustains above 82.80 levels

Euro and Pound Outlook

• Euro gained by 0.03% yesterday on soft dollar and hawkish ECB policy meeting minutes. Meanwhile, sharp upside was capped as data showed activity in manufacturing sector continued to contract. For today, EURUSD is likely to face hurdle near 1.0850 level and slip back towards 1.0780 level amid recovery in dollar and on economic concerns. Meanwhile, investors will remain cautious ahead of economic data and comments from ECB officials to get fresh cues on interest rate outlook. EURINR Feb may slip towards 89.50 level as long as it trades below 90.10 levels

• Pound is expected to rise further towards 1.2700 level amid rise in risk appetite in the global markets and as British business activity survey came in stronger than expected and showed robust growth for services firms. GBPINR Feb is likely to move north towards 105.25 level as long as it stays above 104.75 levels

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