TODAY: Wednesday, 07^th August, 2024

USD/INR:

 Markets have miraculously turned around today after the ‘manic’ Monday crash yesterday. As we write, Japan’s Nikkei is up 10% and has recovered most of yesterday’s losses. The market crash of yesterday, which triggered by a double-digit dip in Japan’s Nikkei and TOPIX indices, served as a stark reminder of how leveraged markets are and how interconnected the moves can be. The BOJ hawkish stance on the JPY led to an avalanche of carry trade unwinds which resulted in a global sell-off yesterday. US equities crashed 2.5%+ and the NASDAQ fell 3%+. Indian indices also were down 3%.

The significant market surge today is marked by a reversal in USDJPY which is back close to145. It seems that the BOJ is now in the market stabilizing the USDJPY fall and may in fact be actively buying USDJPY. US futures are also up 1.5%+ and might be claw back most of yesterday’s losses today, if the USDJPY move sustains. Some of the positivity came also due to a good ISM services data, which suggested continued expansion in US services economy.

MAJOR WORLD CURRENCIES:

On Tuesday, the Pound Sterling prolonged its agony and extended its losses against the Greenback. Although sentiment has improved following Monday's stock riot, the buck remains bid, as shown by the GBP/USD pair, which trades at 1.2709, down by 0.49%.

During the trading session, the GBP/USD tested the 100-day moving average (DMA) At 1.2683 and dipped to a new five-week low of 1.2672, but buyers emerged and lifted the exchange rate above 1.2700. Despite this, momentum favors sellers, as depicted in the Relative Strength Index (RSI), standing bearish.

EUR/USD:

EUR/USD trimmed recent gains and slipped back from the 1.1000 handle on Tuesday as markets continue to digest a recent rebalancing in FX market flows. Investors have recovered their footing and resumed betting on an uptick in the pace of rate cuts from the Federal Reserve (Fed) beginning in September. Pan-EU economic data did little to meaningfully move the needle on Tuesday, with a mid-tier release schedule on the cards for Wednesday.

Forex Today: Markets’ attention remains on data and rate cut bets

Pan-EU Retail Sales contracted -0.3% YoY in June, entirely missing the forecast 0.1% and falling from the previous period’s revised 0.5%. German Industrial Production figures are due on Wednesday, expected to recover to 1% growth MoM in June from the previous period’s -2.5% contraction.

Gold

Reports of Hamas’ political leader Ismail Haniyeh being killed in Iran during a visit to attend the inauguration ceremony of Iran’s newly elected President Masoud Pezeshkian caused geopolitical tensions to escalate. In response, Iran’s Supreme Leader Ayatollah Ali Khamenei has promised “harsh punishment” for Israel in retaliation for the death of Haniyeh. Gold benefited from growing fears over a deepening crisis in the Middle East and continued to push higher.

Meanwhile, the US Federal Reserve (Fed) announced on Wednesday that it left monetary policy settings unchanged, as widely expected. In the post-meeting press conference, Fed Chairman Jerome Powell noted that there was a “real discussion” about the case for reducing rates at the July meeting, adding that a rate cut could be on the table in September. Although a 25 basis points (bps) September rate cut was already fully priced in, according to the CME FedWatch Tool, the benchmark 10-year US Treasury bond yield turned south after the Fed event and lost over 2.5% on the day, providing an additional boost to Gold.

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

(Updated as on 07^th August, 2024, @ 09.00am)

 Cash/Tom: 0.05/0.75                   Cash/Spot:0.10/1.50

 Tom/Spot:  0.05/0.75                    Spot/Next: 0.15/2.10

Cash Date:  05.08.2024

Tom Date:   06.08.2024

Spot Date:   07.08.2024

Outlook for the day 07^th  August, 2024

Rupee expected to trade in range of 83.85-84.00

MAJOR WORLD CURRENCIES: as on (06^th August, 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 06^th August, 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 06^th August, 2024

Stock Indices

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