Last Updated on: 29/07/2024
TODAY: Monday, 29th July, 2024
USD/INR:
INR likely to open around 83.70/75
Dollar is trading steady, even as an in-line PCE inflation data on Friday boosted rate cut hopes further. Dollar Index is at 104.30, with EUR at 1.0865, GBP at 1.2880 and JPY at 153.45. US 10y yield is down to 4.17%. Wall street closed in solid green on Friday as rate cut probabilities consolidated. Markets now price the September rate cut at a near certainty. DOW surged 1.6% higher on Friday. Indian markets are now set for a positive open after the Friday’s wall street move. Further, Friday saw a turnaround in Indian equities from the budget related anxiety, with the Sensex ending 1.6%+ higher.
US PCE inflation at 2.5% and the core at 2.6% came in just right, and gave markets hope that the Fed would now include a firm language in the July meeting to indicate a rate cut. This week is loaded with macro data and events. The FOMC meeting, BOJ decision, ISM data out of the US and finally the jobs data on Friday will keep currencies guessing.
INR has now moved into a new range above 83.60. With the post-budget jitters settling down, the Rupee is now neutrally poised, in the backdrop of improving risk appetite and global Dollar stability. Instead of surging towards 84+, INR could be expected to meander along in a sideways movement in a data- dependant fashion.
MAJOR WORLD CURRENCIES:
USD:
The dollar ended little changed on Friday, pressured by a fall in Treasury yields after a tame U.S. inflation report that investors said kept the runway for the expected September Federal Reserve easing clear.
The Commerce Department's June personal consumption expenditures (PCE) price index nudged up 0.1%, as expected, after being unchanged in May, underscoring an improving inflation environment.
The Federal Open Market Committee meets July 30 and 31, the same days as the BOJ. It is expected to hold borrowing costs steady but traders continue to bet the Fed will cut at its next meeting in September and see up to two more rate cuts this year.
The yield on benchmark U.S. 10-year notes fell 5.4 basis points, while two-year note yields, which typically move in step with interest-rate expectations, were down 5.6 basis points after the report.
The Bank of Japan, on the other hand, may raise rates next week, with markets pricing in a 64% chance of a 10 bps hike . Expectations of narrowing U.S.-Japan interest rate differentials have reduced the confidence in using low-yielding yen as a funding currency for investments in other economies. It still pays to be short yen, but increased volatility makes it harder to hold on to those positions.
Dollar/yen weakened 0.1% to 153.77 in late trade. The euro went up 0.13% to $1.0858.
The dollar index, which measures the greenback against a basket of six currencies including the yen and the euro, fell 0.04% to 104.29.
Sterling strengthened 0.17% to $1.2873. That price is well below the one-year high of $1.3044 hit last week, with traders pricing a 50% chance of the Bank of England cutting rates when it meets next week. Markets are anticipating 51 bps of cuts this year.
GBP/USD:
The GBP/USD pair holds positive ground around 1.2885 during the Asian trading hours on Monday. The uptick of the pair is bolstered by the softer US Dollar (USD) amid the hope of an interest rate cut by the Federal Reserve (Fed) in September. The Fed and Bank of England (BoE) monetary policy meetings on Wednesday and Thursday will be closely watched events. Most analysts and traders expect the Fed to leave the interest rate unchanged at its next meeting on Wednesday. The US Fed might signal this week that interest rate cuts are on the way, although it is widely anticipated to hold steady until its next rate decision in September. Investors are now seeing that the first rate cut will come by mid-September, pricing in 100% of the Fed rate cut by at least a quarter-percentage-point by then, according to data from the CME FedWatch Tool. Traders will also closely monitor the FOMC press conference for fresh impetus. The dovish tone from the FOMC might undermine the Greenback and create a tailwind for GBP/USD.
On the GBP’s front, the BoE might cut interest rates at its August meeting on Thursday, the first-rate cut since 2020. The markets forecast 50% odds of a quarter-point rate cut on Thursday, although views are split on whether the cut will occur now or at the next meeting in September.
EUR/USD:
The EUR/USD pair trades with mild gains around 1.0860 during the early Asian trading hours on Monday. The major pair edges higher as traders widely anticipated the September interest rate cut by the US Federal Reserve (Fed) in September, which drags the Greenback lower. Recent US inflation, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, eased slightly from a year ago in June, paving the way for an interest rate cut by the Fed in September. The US PCE inflation continued to slow in June, slowing from a 2.6% annual gain in May to 2.5% in June. On a monthly basis, the PCE figure increased by 0.1% in June, after remaining unchanged in May. The core PCE price index, the Fed's preferred annual inflation measure, rose 2.6% YoY in June, compared to 2.5% in May, according to Commerce Department figures released Friday.
However, the softer inflation in the US for June is not enough for the Fed to start cutting interest rates at its August meeting on Wednesday. Morgan Stanley analysts noted that 'considerable progress on inflation' will allow the Fed to get closer to rate cuts, adding that they are expecting three cuts this year, beginning at the September FOMC meeting. The financial markets have priced in nearly 90% of the possibility of a Fed rate cut in September, followed by another cut in November and December, according to the CME FedWatch Tool. On the other hand, traders see more of the European Central Bank (ECB) rate cuts in the near term. This, in turn, might weigh on the Euro (EUR) against the Greenback. The ECB left the interest rate unchanged last week, but weaker German IFO survey results and softer data are opening the door to another rate cut by the ECB. Traders will take more cues from the preliminary Gross Domestic Product (GDP) for the second quarter from Germany and the Eurozone. In the case of stronger-than-expected readings, this could lift the shared currency against the USD.
Gold
Gold price once again showed some resilience below the 50-day SMA on Friday and staged a modest recovery from the vicinity of over a two-week low touched the previous day. The move up followed the release of the US Personal Consumption Expenditures Price Index.
The renewed upside in Gold price could be attributed to the extension of Friday’s risk-recovery into Asia, as Asian stocks track the Wall Street rebound amid a bout of profit-taking ahead of a key week.
Risk-flows diminish the appeal of the safe-haven US Dollar while the US Treasury bond yields bear the brunt of increased expectations of a dovish Fed hold this week. Markets are fully pricing in a Fed rate cut in September, according to the CME Group’s FedWatch Tool. Another cut remains on the table for December.
Additionally, over the weekend, fresh tensions in the Middle East spark a flight to safety in the traditional safety net, Gold price, reinforcing the buying interest in the yellow metal.
On Saturday, 12 children and young adults were killed in a rocket strike while playing football in the Israeli-occupied Golan Heights. The Israel Defense Forces (IDF) blamed the Iran-backed militant group, Hezbollah for the attack, saying that it conducted air strikes against seven Hezbollah targets "deep inside Lebanese territory".
The rising tensions have the potential to trigger an all-out war between Israel and Hezbollah, which has prompted investors to scurry for safety in Gold price.
On Friday, Gold price staged an impressive rebound from near two-week lows of $2,353 after the Greenback turned south after the core PCE price index data, the Fed’s preferred inflation gauge, steadied at an annual pace of 2.6% in June, driving up optimism that the central bank will begin cutting rates in September.
Gold markets remain expectant of the potential dovish policy outlook from the Fed and the Bank of England (BoE) later in the week while the developments surrounding the Middle-East geopolitical tensions will remain in focus.
USD/INR as on 26th July, 2024
Currency
OPEN
HIGH
LOW
CLOSE
USD/INR
83.7550
83.6830
83.703
Forward premium (%) as on 26th July, 2024
Periods
1 Month
3 Month
6 Month
12 Month
Premium
1.02/1.16
1.18/1.23
1.40/1.43
1.78/1.80
USD/INR Cash/Tom/Spot Levels: (in Paisa)
(Updated as on 29th July 2024, @ 09.00am)
Cash/Tom: 0.05/0.75 Cash/Spot:0.10/1.50
Tom/Spot: 0.05/0.75 Spot/Next: 0.05/0.75
Cash Date: 29.07.2024
Tom Date: 30.07.2024
Spot Date: 31.07.2024
Outlook for the day 29th July, 2024
Rupee expected to trade in range of 83.62-83.76
MAJOR WORLD CURRENCIES: as on (26th July, 2024)
CURRENCY
GBP
1.2851
1.2878
1.2847
1.2872
EUR
1.0845
1.0868
1.0840
1.0857
AUD
JPY
153.93
154.73
153.11
153.72
CHF
0.8816
0.8844
0.8800
0.8836
XAU
2386.07
2402.89
2384.68
2394.09
Foreign Currencies
Updated: 17:30 hrs. (12:00 GMT) on 26th July, 2024
USD/INR: 83.7325 [FXIR]
Against
USD
INR
1 EUR =
1.085
90.8256
1 GBP =
1.2876
107.7753
100 JPY =
152.22
54.9878
1 AUD =
0.6523
54.5991
1 CHF =
0.8786
95.2680
Precious Metals
Updated: 17:30 hrs. (12:00 GMT) as on 26th July, 2024
Gold ($/oz)
2386.10
Silver ($/oz)
27.75
Stock Indices
Index Close
25th July, 2024
26th July, 2024
BSE Sensex
80039.80
81332.72
NSE Nifty
24406.10
24834.85
Dow Jones
39935.07
40589.34
NASDAQ
17181.72
17357.88
Major Economic Data Releases for the Day
Date
Region
Time (IST)
Description
No Major Data
y/y
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