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Currency Outlook:

Rupee Outlook:

• Rupee hovered in a narrow range yesterday ahead of inflation data from US, which may provide cues on when Fed may begin cutting interest rates

• Rupee is likely to depreciate today amid strong dollar and surge in US treasury yields. Dollar and Yields are moving north as hotter than expected inflation figures clouds rate cut outlook and disappointed investors who hoped Fed will start cutting rates sooner rather than later. Moreover, futures now point to about 87 basis points of easing priced in for this year, as compared to 110 bps prior to the data release. Additionally, rupee may slip on risk aversion in the global markets and surge in crude oil prices. USDINR Feb likely to rise towards 83.15 levels as long as it sustains above 82.90 levels

Euro and Pound Outlook:

• Euro slipped by 0.60% yesterday due to strong dollar and risk aversion in the global markets. Meanwhile, further downside was cushioned as German ZEW survey expectations of economic growth rose more than expected to a 1 year high. For today, EURUSD is likely to slip further towards 1.0650 level as long as it stays below 1.0750 level amid firm dollar and pessimistic global market sentiments after US inflation came higher than expected. Additionally, expectation of disappointing economic data from euro zone will hurt single currency. EURINR Feb may slip towards 88.70 level as long as it trades below 89.40 levels.

• Pound is expected to rise towards 1.2640 level as improved job data prompted investors to scale back bets on spring rate cuts from BOE. Additionally, investors will remain cautious ahead of inflation data to get more cues on rate outlook. GBPINR Feb is likely to move north towards 105.30 level as long as it stays above 104.50 levels

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