TODAY: Monday, 22nd July, 2024

USD/INR:

Rupee remains under pressure, but the global Dollar is seeing a shift in momentum towards weakness as rate cut expectations solidify. JPY has seen a sharp appreciation, seemingly due to an intervention from the BOJ. Their FX reserve data reveals that intervention took place last week also when JPY rose sharply. The BOJ has chosen an opportune moment to intervene in the FX market, when the Dollar is on the backfoot.

Dollar Index is down to 103.75, which in fact was further down intra-day yesterday. EUR is at 1.0935, GBP is at 1.3005 and JPY is at 156.25. US 10y is down to 4.17%. Markets are now pricing in more than 90% chance of a rate cut in the September meeting. US equities were mixed yesterday. Increasing rate cut expectations helped broader market indices, while tech stocks traded sharply lower as concerns around potential curbs on China and as Donald Trump comments on Taiwan. DOW ended 0.6% higher, but NASDAQ crashed 2.75%. Indian markets are slated to open cautiously, following the sharp correction in the US tech index.

USDINR could keep pushing up the current resistance, but the global currency environment remains benign and pro-Rupee. Rate cut expectations, falling US 10y yield, lack of geopolitical risks etc. are all factors keeping the Rupee stable. US economy is in a goldilocks zone, with inflation down and the economic activity not crashing enough to cause panic. One can expect Dollar weakness to stay in the near future and USDINR to tread the range.

MAJOR WORLD CURRENCIES:

EUR/USD failed to return within the ascending regression channel coming from late June after testing the lower limit at the beginning of the week. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50, reflecting a lack of buyer interest.

On the downside, 1.0880 (Fibonacci 23.6% retracement of the latest uptrend) aligns as immediate support. If EUR/USD falls below that level and starts using it as resistance, 1.0840-1.0835 (Fibonacci 38.2% retracement, 100-period Simple Moving Average) could be seen as next support before 1.0810-1.0800 (Fibonacci 50% retracement, static level).

In case EUR/USD manages to rise above 1.0900-1.0910 (lower limit of the ascending channel, 20-period Simple Moving Average) and stabilize there, technical buyers could take action. In this scenario, 1.0940 (mid-point of the channel, static level) could act as strong resistance before 1.1000 (static level, psychological level) could be set as the next bullish target.

GBP/USD:

The Pound Sterling (GBP) fails to extend a slight recovery above the immediate resistance of 1.2930 against the US Dollar (USD) in Monday’s European session. The near-term outlook of the GBP/USD pair has become uncertain after a corrective move from an annual high of 1.3044 recorded last Wednesday. The Cable faced selling pressure as improved speculation for Donald Trump winning United States (US) presidential elections this year prompted the US Dollar’s appeal.

The expectations for Donald Trump increased as US President Joe Biden decided to endorse Vice President Kamala Harris to nominate herself as a contender for elections. 

Investors expect Donald Trump's election victory to lead to a rise in trade restrictions that will increase inflation. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rose to 104.40 but corrected slightly in Monday’s London session. 

Gold

As investors digest the recent US political developments, the US Dollar maintains a weaker undertone so far this Monday. On Sunday, US President Biden dropped out of the election race and endorsed Vice President Kamala Harris for the Democratic ticket. Online betting site PredictIT showed pricing for a victory by Donald Trump had fallen 4 cents to 60 cents, while Harris climbed 12 cents to 39 cents, per Reuters.

A Democratic win would imply higher taxes and the need for lower borrowing costs, suggesting that policy easing for the US Federal Reserve (Fed). This, in turn, would be bearish for the US Dollar in the long term. Therefore, the Greenback is unable to take advantage of the market’s anxiety amid renewed China growth worries while gearing up for key US event risks later this week.

The US equity and Treasury futures rise, exerting negative pressure on the US Treasury bond yields across the curve, lending additional support to the non-yielding Gold price. Markets also seem to ignore the People’s Bank of China’s (PBOC) interest-rate cuts to its one-year and five-year mortgage lending rates, as it raises concerns that the government recognizes the downward pressure on China’s economy.

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

(Updated as on 22^nd July 2024, @ 09.00am)

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

 Tom/Spot:  0.05/0.75                    Spot/Next: 0.05/0.75

Cash Date:  22.07.2024

Tom Date:   23.07.2024

Spot Date:  24.07.2024

Outlook for the day 22^nd July, 2024

Rupee expected to trade in range of 83.60-83.70

MAJOR WORLD CURRENCIES: as on (19^th July , 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 19^th July , 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 19^th July , 2024

Stock Indices

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