TODAY: Friday, 17th January, 2025

USD/INR:

The Indian rupee, on Friday, will likely get support from remarks by a Federal Reserve official that the central bank may deliver more rate cuts this year than forecasted in December, which spurred a further dip in U.S. Treasury yields.

The 1-month non-deliverable forward indicated that the rupee USDINR will open unchanged-to-marginally higher from its close of 86.55 per U.S. dollar in the previous session.

Asian currencies were mostly higher, with the Chinese yuan ticking higher as the country's economic growth beat forecasts.

There are "a few positives" for the rupee to begin the day with, a currency trader at a bank said.

However, "the big risk (U.S. President-elect Donald Trump) is now here" and "it's difficult to see" rupee recovering by much, he said. Trump's inauguration is on Jan. 20.

The rupee is down 0.7% since last Friday, heading for its eleventh straight weekly decline. Since Trump's election victory in early November, the rupee has slid nearly 3% amid near non-stop stress.

India's weak growth in the September quarter, expectations that the Reserve Bank of India may cut borrowing costs soon, and a central bank that seems more willing to allow the currency to depreciate have extenuated the rupee's plight.

MAJOR WORLD CURRENCIES:

USD:

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extended its correction around the 109.00 level on Thursday. This week’s subpar performance stems primarily from declining US Treasury yields, which undermined the Greenback’s appeal mainly due to soft data from December.

GBP/USD:

GBP/USD churned chart paper near familiar levels on Thursday, chalking in a flat day after exploring some intraday downside and snapping a two-day win streak as price action gets hung up on the 1.2200 handle.

UK Gross Domestic Product (GDP) growth rebounded in November but missed median market forecasts, registering a slim 0.1% MoM, down from the expected 0.2%, and climbing only moderately from the previous -0.1% contraction. UK Industrial Production barely moved the needle in November, contracting by 0.4% and entirely missing the forecast upswing to 0.1% compared to the previous month’s -0.6% backslide.

On the US side, Retail Sales figures moderated in December, easing back to 0.4% MoM in the headline figure. Markets expected a dip to 0.6% from the previous month’s revised 0.8%. Core Retail Sales, excluding automotive expenditures, rose to 0.4% MoM from 0.2%, meeting median analyst forecasts. The mixed figures failed to spark significant changes in investor sentiment in either direction.

UK Retail Sales figures for December are due early during Friday’s London market session and are expected to rebound to 0.4% from November’s 0.2% figure. On an annualized basis, Retail Sales are forecast to rally to 4.2% from the previous 0.5%, a lofty median target to set for an economic zone that has routinely missed market expectations in recent months.

EUR/USD:

EUR/USD middled through Thursday’s market action with bids hung up on the 1.0300 price handle. There’s a limited offering from the economic data docket on Friday, and traders will be keeping an ear to the ground for any rumblings from central bank policymakers.

German Harmonized Index of Consumer Prices (HICP) inflation figures came in exactly as markets expected on Thursday, not exactly a large reach as they were non-preliminary figures and rarely change unless things are going disastrously wrong. Retail Sales figures moderated in December, easing back to 0.4% MoM in the headline figure. Markets expected a tick down to 0.6% from the previous month’s revised 0.8%. Core Retail Sales excluding automotive expenditures rose to 0.4% MoM from 0.2%, meeting median analyst forecasts. The mixed figures failed to spark significant changes in investor sentiment in either direction.

Coming up on Friday, little of note sits on the data docket, with more non-preliminary HICP inflation figures due for the broader pan-European economic zone, which is expected to confirm a slight uptick to 2.8% YoY from 2.7%. On the US side of the Atlantic, US Housing Starts, Building Permits, and Industrial Production figures for December are all expected to print relatively close to previous figures, and are unlikely to drive much market volatility on their own.

Gold:

Gold price surged above the $2,700 mark on Thursday as the Greenback trimmed some of its earlier gains. Data from the United States (US) revealed that the economy remains solid after the release of consumer spending figures and jobs data. US bond yields fell as traders expect further easing by the Federal Reserve (Fed). At the time of writing, the XAU/USD trades at $2,715, up 0.72%.

Bullion extended its gains as market participants prepare for US President-elect Donald Trump's inauguration. The US Census Bureau revealed that Retail Sales fell short of estimates in December. However, November’s data was upwardly revised, indicating consumer strength.

Other data showed that the number of Americans filing for unemployment insurance jumped for the first time since December 7, 2024, and weighed on the Greenback.

The US Dollar Index (DXY), which tracks the performance of the USD against a basket of six peers, slips 0.14%, down below the 109.00 figure.

Fed Governor Christopher Waller crossed the wires and was dovish, stating that the US Central Bank could lower borrowing costs sooner and faster if the disinflation process evolves.

The US economic docket will remain empty throughout the rest of the day and traders will eye housing data, particularly Building Permits and Housing Starts.

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

(Updated as on 17^th January, 2025 @ 09.00am)

 Cash/Tom: 0.40/5.00                Cash/Spot: 0.40/5.00

 Tom/Spot:  -                                Spot/Next: 0.10/1.25               

Cash Date: 17.01.2025

Tom Date:   21.01.2025

Spot Date:   21.01.2025

Outlook for the day 17th January, 2025:   Rupee expected to trade in range of 86.50/86.65.

MAJOR WORLD CURRENCIES: as on (16^th January, 2025)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 16^th January, 2025

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 16^th January, 2025

Stock Indices

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