TODAY: Tuesday, 21^st  January, 2025

USD/INR:

The Indian rupee strengthened on Tuesday after Donald Trump held off on implementing trade tariffs on his first day as U.S. President but said he is considering levies on imports from Canada and Mexico, prompting the dollar to pare initial losses.

While the dollar slumped on Monday after trade tariffs did not feature prominently in Trump's inaugural speech, it bounced back when Trump later said he was thinking of a 25% tariff on goods from Canada and Mexico from Feb. 1.

In a presidential memo, Trump directed U.S. federal agencies to probe the risks of large trade deficits "and recommend appropriate measures, such as a global supplemental tariff, or other policies."

The dollar index was last at 108.3, up 0.3% on the day, while Asian currencies were mostly stronger. The offshore Chinese yuan rose to an over one-month peak but eventually pared gains to trade at 7.27.

MAJOR WORLD CURRENCIES:

USD:

GBP/USD:

GBP/USD rose 1.35% on Monday, gaining ground and climbing back over the 1.2300 handle as markets breathe a collective sigh of relief after freshly-minted US President Donald Trump made a last-minute pivot away from a broad, sweeping policy of day-one trade tariffs. Back for a second term, Donald Trump is still actively pursuing a policy of reviewing trade circumstances with most of the US’ strongest allies in trade terms, however the returning president has already begun waffling on his campaign promises to use executive orders to apply tariffs of at least 20% across the board, with a 65% import tariff threatened against China specifically.

UK Claimant Count change figures are expected to climb 10.3K in December, a sharp uptick from the previous month’s 0.3K print. However the UK’s ILO Unemployment Rate for the three months ended in November is still expected to hold steady at 4.3%.

Data releases on the US side remain tepid until Friday’s S&P Global Purchasing Managers Index (PMI). Median market forecasts are expecting a mixed bag result, with the Services component expected to decline but survey results from the Manufacturing component expected to tick upwards slightly.

EUR/USD:

EUR/USD rallies to near 1.0400. in Monday’s North American session. The major currency pair soars as the safe-haven appeal of the US Dollar (USD) diminishes significantly after a report from the Wall Street Journal (WSJ) indicated that the presidential memo by United States (US) President-elect Donald Trump lacks imposition of tariffs immediately. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plunges to near 108.25.

The WSJ reported that Trump's presidential memo directs agencies to scrutinize the US's relationship with China and its neighboring nations and lacks tariffs' imposition right from the first day of office, which market participants feared earlier.

The Greenback was already under pressure after investors digested reports from Bloomberg that Trump would declare a national emergency soon after taking office. Market participants expected that this move would allow him to boost domestic energy production and reverse some climate change policies executed under Joe Biden’s administration.

Gold:

Gold price builds on its rebound to retest monthly highs of $2,725 early Tuesday. Gold buyers are back in action alongside US President Donald Trump’s tariff threats, fuelling risk-off sentiment across the financial markets.

Trump said: “We’re thinking in terms of 25% on Mexico and Canada,” effective February 1. He added that his administration “will straighten out the deficit with EU with tariffs or by them buying our oil and gas,” threatening tariffs on the old continent anytime soon.

Trump also noted that he is prepared to impose tariffs on China if Beijing doesnt approve the TikTok deal. Investors scurried for safety in the traditional safe-haven Gold price, propping up the rates close to monthly highs of $2,725.

The flight to safety theme remains supportive of Gold price and US government bonds, which weigh negatively on the US Treasury bond yields. Trump tariff threats could revive inflation concerns worldwide, providing extra support to Gold price. The bullion is considered a hedge against inflation.

However, further upside appears elusive for Gold buyers as the US Dollar (USD) has also gains on safe-haven demand, capping the USD-denominated bright metal. Additionally, expectations that the US Federal Reserve (Fed) would deliver two interest rate cuts this year after the tame December inflation data, act as a tailwind to Gold price but that could change if inflation concerns sag investors’ sentiment.

On Monday, Gold price witnessed good two-way businesses, initially extending Friday’s correction on easing Middle East tensions and profit-taking heading into Trump’s inauguration. However, during Trump’s inaugural address, the USD dipped to a nine-day low, helping Gold price stage a decent rebound above $2,700.

A 15-month-long relentless war between Israel and Hamas culminated in a ceasefire on Sunday as hundreds of trucks carrying aid entered Gaza on the first day.

In the day ahead, Gold trades will remain at the mercy of the broader market sentiment and Trump’s tariff talks, in the absence of any top-tier US economic data releases.

USD/INR Cash/Tom/Spot Levels: (in Paisa)

(Updated as on 21^st January, 2025 @ 09.00am)

 Cash/Tom:  0.40/1.40                Cash/Spot: 0.80/2.80

 Tom/Spot:  0.40/1.40                 Spot/Next: 0.40/1.40               

Cash Date:  21.01.2025

Tom Date:   22.01.2025

Spot Date:   23.01.2025

Outlook for the day 21^st January, 2025:   Rupee expected to trade in range of 86.20/86.60.

MAJOR WORLD CURRENCIES: as on (20^th January, 2025)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 20^th January, 2025

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 20^th January, 2025

Stock Indices

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