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Market Roundup

* The Indian rupee is expected to start steady following Asian currencies. The focus will be on today’s inflation and output data, scheduled later today. Spot USDINR settled at 83.956 with a weekly loss of 0.24%, marking the sixth consecutive weekly decline in the trot. Technically, the pair has support at 83.70 and resistance at 84.10.

* India recorded the second-highest net foreign outflow last week at –$1.48b. Foreign investors net sold through the week except on Friday when they net bought $62.1m. The Reserve Bank of India (RBI) maintained its rates unchanged for the ninth consecutive meeting. Its tone remained hawkish, as Governor Shaktikanta Das warned against complacency due to declining core inflation. He also urged lenders to carefully monitor the quality of loans to avoid systemic risks as the county continues to see high growth in certain segments of retail loans.

* Forex:

* The DXY rose and was last seen around 103.18 as the greenback stabilised without strong market cues. The UST market saw profit-taking activities with benchmark 10-year yield closing the review week higher at 3.94% (prior week: 3.79%) as investors deemed the fears of an economic recession kindled by the weaker-than-expected July jobs report were exaggerated.

* The depreciation was due to a more dovish tone by Fed officials, heightening the expectations for a Fed rate cut soon. Renewed concerns about recession risks in the U.S. further supported it.

* The CME FedWatch Tool indicates that the Fed will slash its rates during the Sep-24 meeting. There is a 51.0% probability of a 25bps cut and a 49.0% probability of a 50bps cut.

* The rapid carry-trade unwinding had paused much of last week since the release of the US Jul ISM services which turned out stronger and comparatively dovish comments by current/former BoJ officials/summary of opinions.

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