TODAY: Thursday, 4th July, 2024

USD/INR:

Dollar is soft after the jobless claims data, ADP private payrolls underwhelmed and the ISM services data suggested contraction. But, JPY could not escape the weakening momentum, and USDJPY traded close to 162 before retracting to the current 161.40 level. Dollar Index is at 105.30. EUR is at 1.0790 and GBP is at 1.2750. US 10y yield has fallen to 4.35%, and USDJPY has reversed lower in line with the lower long term US yields. US equities were mixed, and even as the DOW ended flat, S&P 500 and NASDAQ closed well in the green. Indian equities traded higher yesterday, with the Sensex breaching 80k. 

INR remains under mild pressure, tracking the JPY weakness. But the fall in the long-term US yields and the possibility of a strong intervention from the BOJ will keep a lid on a possible runaway depreciation. USDINR can spend a few days in the current zone, until the JPY move is resolved, but the outlook for the Rupee remains stable over the next month of two, driven by US rate cut expectations. Any volatility in the Rupee could start in August, as the September meeting approaches, and then continue into the US election cycle.

MAJOR WORLD CURRENCIES:

EUR/USD continues its winning streak, trading around 1.0790 during the Asian session on Thursday. This upside is attributed to a decline in the US Dollar (USD) due to the escalated speculations of the Federal Reserve (Fed) reducing interest rates in 2024. US markets will be closed on Thursday in observance of the Independence Day holiday.

The US Dollar Index (DXY), which gauges the USD against six other major currencies, faces challenges amid lower US Treasury yields. The DXY trades around 105.30 at the time of writing. As of Wednesday’s close, the 2-year and 10-year yields on US Treasury bonds stood at 4.70% and 4.35%, respectively.

On the US data front, US ISM Services PMI fell sharply to 48.8 in June, marking the steepest decline since April 2020. This figure was well below market expectations of 52.5, following a reading of 53.8 in May. The ADP Employment report showed that US private businesses added 150,000 workers to their payrolls in June, the lowest increase in five months. This figure fell short of the expected 160,000 and was below the downwardly revised 157,000 in May.

GBP/USD:

GBP/USD extended a near-term rebound on Wednesday, bolstered by a broad softening in US economic figures in the midweek market session. Thursday’s upcoming UK election will draw plenty of attention from Cable traders as US markets hunker down for the wait through Thursday’s market holiday.

US markets will be dark on Thursday for the US Independence Day holiday, leaving Cable to churn as the UK’s Parliamentary Elections get underway. The Labour Party in the UK is widely expected to win a majority in the government, ending 14 years of Conservative party rule. Based on the latest mega polls released on Wednesday, it is anticipated that Labour will significantly outperform the Conservatives, with Keir Starmer of the Labour Party expected to replace the current Conservative Prime Minister, Rishi Sunak. 

Gold

Gold price (XAU/USD) trades with a mild positive bias during the early European trading hours on Thursday, albeit lacks follow-through and remains below a nearly two-week high touched the previous day. The underlying strong bullish sentiment across the global equity markets is seen acting as a headwind for the safe-haven precious metal amid relatively thin liquidity on the back of the Independence Day holiday in the US. Traders also seem reluctant and prefer to wait for the release of the closely-watched US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report on Friday before positioning for the next leg of a directional move. 

The downside for the Gold price, meanwhile, seems cushioned in the wake of firming expectations that the Federal Reserve (Fed) will start its rate-cutting cycle later this year. The bets were reaffirmed by softer US macro data released on Wednesday that pointed to signs of weakness in the labor market and a softening economy. Moreover, the minutes of the last FOMC meeting revealed that the majority of policymakers said the US economic growth is gradually cooling. This led to the overnight slump in the US Treasury bond yields and dragged the US Dollar (USD) to a three-week low, which might continue to lend support to the non-yielding yellow metal.

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

(Updated as on 03^rd July 2024, @ 09.00am)

 Cash/Tom:  -/-                              Cash/Spot:-/-

 Tom/Spot:  0.15/2.10                    Spot/Next: 0.05/0.70

Cash Date:  04.07.2024

Tom Date:   05.07.2024

Spot Date:  08.07.2024

Outlook for the day 04^th July, 2024

Rupee expected to trade in range of 83.45-83.60

MAJOR WORLD CURRENCIES: as on (04^th July , 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 03^rd July , 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 03^rd July , 2024

Stock Indices

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