TODAY: Wednesday, 10th July, 2024

USD/INR:

The Indian Rupee (INR) trades on a weaker note on Wednesday amid the modest rebound of the US Dollar (USD). The persistent Greenback demand from local importers might continue to limit the local currency’s gains. However, sustained Indian foreign inflows, a positive economic outlook, and the fastest macroeconomic growth among large economies might all contribute to the INR's upside.

Traders will focus on the second semi-annual testimony by Federal Reserve (Fed) Chair Jerome Powell on Wednesday. The attention will shift to the US Consumer Price Index (CPI) inflation data on Thursday. The US CPI is projected to show an increase of 3.1% YoY in June, while core inflation is projected to remain steady at 3.4% YoY. Any dovish comments from the Fed’s Powell or signs of softer inflation in the US might exert some selling pressure on the Greenback. 

MAJOR WORLD CURRENCIES:

• Fed Chair Jerome Powell's Semiannual Monetary Policy Report to Congress and his testimony before the Senate Banking Committee are the standout events on Tuesday.
• Powell re-emphasized the need for encouraging economic data to shore up the Fed's confidence in managing inflation effectively.
• He underscored that it is not only high inflation that poses a risk but is apprehensive about announcing a rate cut until there is assured evidence that inflation is consistently gravitating toward the 2% target.
• However, he stressed the importance of meeting-by-meeting policy decisions, admitting that while progress has been made toward the 2% inflation goal, the recent data needs to be more encouraging to warrant a rate cut.
• US Consumer Price Index (CPI) arrives on Thursday and will be closely watched by market participants.
• YoY CPI headline inflation is forecasted to decelerate by two points to 3.1%, and the core reading is expected to hold steady at 3.4%.
• As per the CME FedWatch Tool, the probability of a rate cut in July remains below 10% but at approximately 80% for September.

EUR/USD clings to gains above the crucial support of 1.0800 in Tuesday’s American session. The major currency pair holds gains as the US Dollar (USD) remains under pressure due to firm market speculation that the Federal Reserve (Fed) will start reducing interest rates in September.

According to the CME FedWatch tool, traders see a 77% chance that interest rates will be lower than current levels in the September meeting, up from 65.6% recorded a week ago. Easing United States (US) labor market strength has prompted expectations for the Fed to pivot to policy normalization in September. The Unemployment Rate rose to its highest in more than two years, and Average Hourly Earnings eased expectedly in June, pointing to moderating labor market conditions.

GBP/USD:

GBP/USD remains tepid for the second consecutive day, trading around 1.2780 during the Asian session on Wednesday. The decline of the GBP/USD pair can be attributed to the strengthening US Dollar (USD), which has gained momentum following Federal Reserve Chairman Jerome Powell's testimony before the US Congress on Tuesday. Powell acknowledged improving inflation data but reiterated the Fed's cautious stance.

Fed Chair Jerome Powell stated, "More good data would strengthen our confidence in inflation." Powell emphasized that a "policy rate cut is inappropriate until the Fed gains greater confidence that inflation is headed sustainably toward 2%." He also noted that "first-quarter data did not support the greater confidence in the inflation path that the Fed needs to cut rates."

Gold

The Gold price (XAU/USD) trades with mild gains on Wednesday during the early Asian session. The growing speculation that the US Federal Reserve (Fed) is likely to start cutting rates as early as September continues to support the non-yielding metal. Furthermore, political uncertainties within Europe and globally might boost Gold price, a traditional safe-haven asset.

On the other hand, the pause of China's central bank Gold purchases for a second consecutive month might prompt traders to reduce bullish bets in the yellow metal as China is the world's largest gold consumer. Investors will keep an eye on the second semi-annual testimony by Federal Reserve (Fed) Chair Jerome Powell on Wednesday, along with speeches by the Fed's Michelle Bowman and Austan Goolsbee. On Thursday, the US Consumer Price Index (CPI) inflation data will be closely monitored. This data might offer more clarity on the US interest rate path.

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

(Updated as on 10^th July 2024, @ 09.00am)

 Cash/Tom: 0.10/0.75                    Cash/Spot:0.20/1.50

 Tom/Spot:  0.10/0.75                    Spot/Next: 0.15/2.00

Cash Date:  09.07.2024

Tom Date:   10.07.2024

Spot Date:  11.07.2024

Outlook for the day 10^th July, 2024

Rupee expected to trade in range of 83.37-83.57

MAJOR WORLD CURRENCIES: as on (09^th July , 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 09^th July , 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 09^th July , 2024

Stock Indices

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