TODAY: Friday, 12th July, 2024

USD/INR:

Dollar is weak after lower-than-expected US CPI firmed up rate cut expectations and reaffirmed Powell’s dovish tilt in his testimony. The headline CPI came in at 3% against consensus estimate of 3.1%. The core CPI also was lower than expected and the MoM number was negative. Rate cut probabilities spiked to 85%+ for September post the data.

Dollar Index is at 104.55, with EUR at 1.0865, GBP at 1.2905 and JPY at 159.30. US 10y is down to 4.22%. Falling US yields have directly helped JPY strength.  US equities were down due to steep fall in tech stocks on the back of “sell the news” profit taking post the CPI. Indian markets were flat yesterday and should see some positivity today due to the inflation cheer.

Rupee has not really captured much benefit of the Dollar downside until now, but is set for some upside especially given the pullback in USDJPY. The medium-term global picture remains benign with inflationary pressures receding and FOMC amenable to rate cuts. The current level of USDINR forms a good resistance and the Rupee might continue to trade sideways for more days to come.

MAJOR WORLD CURRENCIES:

EUR/USD gathered bullish momentum in the American session on Thursday and reached its highest level since early June at 1.0900. After staging a downward correction, the pair holds comfortably above 1.0850 in the European session on Friday.

Soft inflation data from the US caused the US Dollar (USD) to come under heavy selling pressure. The Consumer Price Index (CPI) declined by 0.1% on a monthly basis, while the core CPI rose only 0.1% in the same period. Both of these readings came in below market expectations and allowed investors to continue to price in a Federal Reserve (Fed) rate cut in September.

According to the CME FedWatch Tool, the probability of the Fed leaving the policy rate unchanged in September declined below 10% from above-20% before the CPI data releases.

In the second half of the day, the Producer Price Index (PPI) data for June will be featured in the US economic docket. On a monthly basis, the PPI is forecast to rise 0.1%. A negative reading could put additional weight on the USD's shoulders and help EUR/USD push higher. On the other hand, a stronger-than-forecast increase could help the USD stay resilient against its rivals but market reaction could remain limited.

GBP/USD:

Softer-than-expected inflation readings have weighed heavily on the US Dollar and boosted Fed officials' confidence that the disinflation process has resumed. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, remains on the backfoot below 104.50.

On Thursday, San Francisco Fed Bank President Mary Daly said recent cooler inflation readings and easing labor market conditions have made one or two rate cuts appropriate for this year. 

In Friday’s session, investors will focus on June’s US Producer Price Index (PPI) data, which will be published at 12:30 GMT. Economists expect that headline and core producer inflation accelerated in June on a monthly as well as annual basis.

Gold

Thursday’s data showed US headline inflation cooling to 3.0% year-on-year in June, below estimates of 3.1% and the previous month's 3.3%. 

On a monthly basis, CPI fell by 0.1% in June – the biggest outright decline in prices since May 2020 during the Covid-19 pandemic, according to Deutsche Bank’s Global Head of Macro Research, Jim Reid. 

Meanwhile, core CPI – which excludes volatile food and energy components – slowed to 3.3%, falling below expectations of 3.4% from 3.4% previously. On a 3-month annualized basis, moreover, core inflation is now just above the Fed’s 2.0% target.

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

(Updated as on 12^th July 2024, @ 09.00am)

 Cash/Tom: 0.10/0.75                    Cash/Spot:0.40/2.75

 Tom/Spot:  0.30/2.00                    Spot/Next: 0.10/0.75

Cash Date:  12.07.2024

Tom Date:   15.07.2024

Spot Date:  16.07.2024

Outlook for the day 12^th July, 2024

Rupee expected to trade in range of 83.40-83.60

MAJOR WORLD CURRENCIES: as on (11^th July , 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 11^th July , 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 11^th July , 2024

Stock Indices

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