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NRI Newsletter - Market News

Last Updated on: 04/07/2024

NRI Newsletter - Market News

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:

USD:

The U.S. dollar retreated in early European trade Wednesday after Federal Reserve Chair Jerome Powell flagged progress towards bringing down inflation, while the euro edged higher ahead of the second round of the French parliamentary vote.At 04:35 ET (08:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 105.287.The dollar slipped lower after comments on Tuesday from Fed head Powell, at a conference in Portugal sponsored by the European Central Bank, reinforced expectations that U.S. interest rate cuts are not far away.

The Federal Reserve is set to release later Wednesday the minutes from its monetary policy meeting in June, when the central bank left interest rates unchanged at a more than two-decade high range and signaled that it expects to cut borrowing costs just once this year.

 

 

 

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 as on 04th July, 2024

Currency

OPEN

HIGH

LOW

CLOSE

USD/INR

83.5075

83.5550

83.49

83.53

 

 

Forward premium (%) as on  04th July, 2024

Periods

1 Month

3 Month

6 Month

12 Month

Premium

1.06/1.20

1.12/1.16

1.28/1.30

1.63/1.65

       

 

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

(Updated as on 03rd 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 04th July, 2024

Rupee expected to trade in range of 83.45-83.60

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

 

CURRENCY

OPEN

HIGH

LOW

CLOSE

GBP

1.2675

1.2777

1.2671

1.2740

EUR

1.0741

1.0816

1.0734

1.0786

AUD

0.6665

0.6733

0.6662

0.6704

JPY

161.44

161.99

160.76

161.68

CHF

0.9033

0.9050

0.8984

0.9014

XAU

2327.62

2364.89

2626.79

2356.6562

 

Foreign Currencies

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

USD/INR: 83.5350 [FXIR]

Against

USD

INR

1 EUR    =

1.0758

89.8670

1 GBP   =

1.2707

106.1479

100 JPY =

161.93

51.5871

1 AUD   =

0.6678

55.7847

1 CHF    =

0.9033

92.4776

 

Precious Metals

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

Gold ($/oz)

2361.35

Silver ($/oz)

30.13

 

Stock Indices

 

Index Close

02nd July , 2024

03rd July , 2024

BSE Sensex

79441.45

79986.80

NSE Nifty

24123.85

24286.50

Dow Jones

39331.85

39308.00

NASDAQ

18028.76

18188.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major Economic Data Releases for the Day

 

Date

Region

Time (IST)

Description

 

04.07.2024

CHF

12.00 PM

CPI m/m

y/y

 

04.07.2024

GBP

All Day

Parliamentary Elections

 

 

04.07.2024

GBP

02.00 PM

Construction PMI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The views contained herein are those of individuals and not necessarily those of the Bank.  This is for information purpose only and no recommendations are intended.  While due care has been taken in preparation of this communication, IOB cannot be held responsible for any consequences of any decisions based on this information. Comments/Suggestions may be freely emailed to feddeal@iobnet.co.in