Last Updated on: 26/07/2024
TODAY: Friday, 26th July, 2024
USD/INR:
INR likely to open around 83.70/75
Dollar remains muted, awaiting the PCE. JPY is strong as markets await the BOJ meeting next week. US equities continued their weakness, driven by the tech stock bleed. Indian equities have also been docile after the budget and yesterday saw another negative close. The US GDP growth at 2.8% showed an ongoing robustness, but the PCE price Index came in lower, which was cheered. The Dollar remains under pressure despite the data, as markets want to play the next FOMC meeting outcome. Dollar Index is at 104.30, with EUR at 1.0860, GBP at 1.2860 and JPY at 153.50. DOW ended in the Green, but NASDAQ fell close to 1%. Sensex fell 0.14%, but the overall market ended flattish.
Today’s core PCE inflation is keenly awaited to affirm the market hope of rate cuts in the September meeting. Given the recent trend, one might not expect any negative surprises in the PCE data. USDINR has settled into a new range with the 83.60 area being a strong support, and the pair can be expected to be mildly biased towards INR depreciation.
MAJOR WORLD CURRENCIES:
USD:
The yen edged lower from a 2-1/2-month high against the U.S. dollar on Thursday, as financial markets stabilized, with investors looking ahead to next week's Bank of Japan meeting which could see a potential rate hike.
The Japanese unit this week rallied sharply as market participants unwound their long-held bets against the currency. At the same time, a plunge in global stocks in recent sessions had driven investors toward traditionally safe assets such as the Swiss franc and yen.
U.S. equities, however, recovered on Thursday after a steep sell-off in the previous session.
For the week, the yen has risen 2.4%, on track for its best weekly gain since late April. The greenback was last slightly down at 153.84 yen.
The dollar, however, trimmed losses against the yen and euro after data showed the world's largest economy expanded faster than expected and inflation slowed in the second quarter. That reduced brewing expectations of a larger-than-expected rate cut in September, or a sudden Federal Reserve easing at next week's meeting.
U.S. jobless claims data were also consistent with an economy still holding up well.
Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 235,000 for the week ended July 20, the data showed. Economists polled by Reuters had forecast 238,000 claims for the latest week.
The only blemish, however, was the U.S. durables report, which showed durable goods orders fell 6.6% in June on slumping transportation orders, compared with expectations for a 0.3% rise.
In other currencies, the Australian dollar fell to US$0.6519, its lowest since early May. It was last down 0.6% against the greenback at US$0.6541.
GBP/USD:
GBP/USD is holding mild gains above 1.2850 in early Europe on Friday, helped by a broadly weaker US Dollar amid a risk reset. The Fed-BoE divergent policy outlooks continue to favor the Pound Sterling. Traders look to the US PCE inflation data for fresh directives.
GBP/USD failed to make a decisive move in either direction and closed virtually unchanged on Wednesday. As safe-haven flows dominate the financial markets on Thursday, the pair struggles to gain traction and trades slightly below 1.2900.
Investors grow increasingly concerned over a gloomy economic outlook as the People’s Bank of China (PBoC) unexpectedly loosened its policy for the second time this week. Following the decision to lower the one-year and five-year Loan Prime Rates by 10 basis points earlier in the week, the PBoC announced on Thursday that it cut the one-year Medium-term Lending Facility (MLF) rate from 2.50% to 2.30%.
Reflecting the risk-averse market atmosphere, the UK's FTSE 100 Index is down nearly 1% in the European session. Meanwhile, Nasdaq futures and S&P 500 futures were last seen losing 0.4% and 0.2%, respectively.
In the second half of the day, the US Bureau of Economic Analysis will release its first estimate of the Gross Domestic Product (GDP) growth for the second quarter. Markets expect the US' GDP to expand at an annual rate of 2% following the 1.4% growth recorded in the previous quarter. In case the GDP reading arrives below analysts' estimates, the USD could have a hard time finding demand in the early American session. Nevertheless, GBP/USD's upside is likely to remain capped if Wall Street's main indexes open in the red and stretch lower.
The US economic docket will also feature the weekly Initial Jobless Claims, which is forecast to decline to 238,000 from 243,000 last week.
EUR/USD:
EUR/USD is gaining recovery momentum above 1.0850 in the early European session on Friday. The pair stays underpinned by the renewed US Dollar weakness, as risk sentiment rebounds ahead of the key US PCE inflation data.
EUR/USD managed to regain some composure after two daily drops in a row and advanced to two-day peaks around 1.0870 following an earlier test of the area near the critical 200-day SMA (1.0818). The daily gain in spot came in tandem with the broad-based weak tone in US and German yields.
On the other side of the equation, the US Dollar (USD) traded without clear direction on Thursday, recouping part of the ground lost, especially vs. the Japanese yen, and encouraging the USD Index (DXY) to maintain its business around the 104.30 zone.
Furthermore, the European currency seems to have by-passed a drop in Germany’s Business Climate tracked by the IFO institute in July, which added to recent discouraging results from advanced Manufacturing and Services PMIs in the region.
Back to monetary policy, a September interest rate cut by the Federal Reserve (Fed) appears fully anticipated, with investors also expecting another reduction by year-end. In this context, market participants might shift their focus to the US political scene, especially after current Vice President K. Harris garnered significant support to face Republican candidate D. Trump in the November 5 elections.
Gold
Gold price has managed to defend the key support near $2,360, consolidating weekly losses in Friday’s Asian session. Traders now shift their focus toward the monthly release of the US PCE Price Index after Thursday’s second-quarter GDP.
Markets continued to fully price in a US Federal Reserve (Fed) interest-rate cut in September, despite the acceleration in the US economic growth, as disinflation remains in progress. Gold price initially reacted negatively to the US GDP release, accelerating its downside to over two-month lows of $2,353 but staged a modest comeback on softer US core PCE inflation reading, settling Thursday above the key support at $2,360.
In the first half of Thursday’s trading, Gold price tumbled over 1%, having faced rejection at $2,400, undermined by profit-taking amid the market’s repositioning ahead of high-impact US economic data. China’s economic slowdown concerns also played a part in the Gold price sell-off, as investors raised demand concerns from the world’s top yellow metal consumer.
Gold buyers also found some respite from the persistent weakness in the USD/JPY pair, as the Japanese Yen carry trading unwinding gathered pace ahead of next week’s Bank of Japan’s (BoJ) policy meeting. Odds of a BoJ rate hike next week are on the rise, with additional credence coming in from Tokyo inflation data released early Friday.
Later on Friday, the annual core US PCE Price Index is expected to show an increase of 2.5% in June, a tad softer than the 2.6% booked in May. The headline annual figure is also expected to rise by 2.5% in the same period. An in-line with market expectations or a softer-than-expected US core PCE inflation print is likely to serve as a saving grace to Gold buyers.
The reaction to the data is mostly discount after Thursday’s quarterly core PCE data but the end-of-the-week flows and positions adjustments, ahead of the Fed policy announcements and Nonfarm Payrolls data next week, could spike up volatility around Gold price.
USD/INR as on 25th July, 2024
Currency
OPEN
HIGH
LOW
CLOSE
USD/INR
83.74
83.78
83.63
83.7
Forward premium (%) as on 25th July, 2024
Periods
1 Month
3 Month
6 Month
12 Month
Premium
1.02/1.16
1.18/1.23
1.40/1.43
1.78/1.79
USD/INR Cash/Tom/Spot Levels: (in Paisa)
(Updated as on 26th July 2024, @ 09.00am)
Cash/Tom: 0.15/1.75 Cash/Spot:0.20/2.50
Tom/Spot: 0.05/0.75 Spot/Next: 0.05/0.75
Cash Date: 26.07.2024
Tom Date: 29.07.2024
Spot Date: 30.07.2024
Outlook for the day 26th July, 2024
Rupee expected to trade in range of 83.62-83.76
MAJOR WORLD CURRENCIES: as on (25th July, 2024)
CURRENCY
GBP
1.2905
1.2915
1.2847
1.2851
EUR
1.0839
1.0869
1.0826
1.0844
AUD
0.6580
0.6582
0.6512
0.6538
JPY
153.89
154.31
151.93
153.93
CHF
0.8849
0.8856
0.8775
0.8815
XAU
2398.11
2401.09
2352.99
2364.49
Foreign Currencies
Updated: 17:30 hrs. (12:00 GMT) on 25th July, 2024
USD/INR: 83.7025 [FXIR]
Against
USD
INR
1 EUR =
1.0851
90.8256
1 GBP =
1.2876
107.7753
100 JPY =
152.22
54.9878
1 AUD =
0.6523
54.5991
1 CHF =
0.8786
95.2680
Precious Metals
Updated: 17:30 hrs. (12:00 GMT) as on 25th July, 2024
Gold ($/oz)
2364.20
Silver ($/oz)
27.99
Stock Indices
Index Close
25th July, 2024
26th July, 2024
BSE Sensex
80148.88
80039.80
NSE Nifty
24413.50
24406.10
Dow Jones
39853.87
39935.07
NASDAQ
17342.41
17181.72
Major Economic Data Releases for the Day
Date
Region
Time (IST)
Description
26/07/2024
06.00PM
Core PCE Price Index m/m
y/y
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