TODAY: Tuesday, 30th July, 2024

USD/INR:

INR likely to open around 83.70/75

Dollar is trading strong as markets await the key data and events this week. FOMC is due tomorrow. USDJPY is higher, but still tentative, focused on the BOJ decision tomorrow. US equities were mixed and flattish, and Indian indices ended in mild green.

Dollar Index is at 104.60, with EUR at 1.0820., GBP at 1.2855 and JPY at 154. DOW ended down 0.1% while S&P 500 closed flat. Sensex traded flat, but the broader market index closed 0.4% higher. 

The Rupee’s volatility is again subdued as it finds space in a new range. A combination of stable Dollar and prospects of FOMC rate cut has ensured that untoward depreciation of the Rupee is out of question. But, the relative strength of the Dollar has been keeping global currencies in check, and the CNY / JPY weakness remains a key issue keeping Rupee appreciation in check. For now, while the bias remains towards softness in the Rupee, the conditions are not right for a sustained USDINR move in either direction.

MAJOR WORLD CURRENCIES:

After posting losses for the second consecutive week, GBP/USD stays under pressure early Monday and trades in negative territory below 1.2850. The pair's near-term technical outlook points to a buildup of bearish momentum.

The Federal Reserve (Fed) and the Bank of England (BoE) will announce monetary policy decisions later in the week.

Growing expectations for a BoE rate cut this Thursday make it difficult for Pound Sterling to find demand. According to Reuters, UK interest rate futures point to a 58% chance of a 25 basis points (bps) BoE rate cut on August 1, up from nearly 50% on Friday.

The Fed is widely expected to leave policy settings unchanged following the July 30-31 policy meeting. As markets have already fully priced in a 25 bps Fed rate reduction in September, Pound Sterling's valuation heading into the BoE meeting could continue to drive GBP/USD's action.

The economic calendar will not feature any high-impact data releases and GBP/USD could struggle to stage a rebound in the near term.

EUR/USD:

EUR/USD consolidates in a range above a two-and-half-week low touched on Monday. September Fed rate cut bets keep the USD bulls on the defensive and act as a tailwind. A sustained break below 100-day SMA is needed to support prospects for further losses.

EUR/USD succumbed to the firm start to the week by the Greenback, reversing two daily gains in a row and flirting with three-day lows near the 1.0800 region on Monday.

Conversely, the US Dollar (USD) managed to come roaring and advance to multi-day tops near 104.80, reclaiming at the same time the area beyond the critical 200-day SMA (104.33).

In addition, daily gains in the pair came pari passu with further weakness in US and German yields, at a time when investors expect both the Federal Reserve (Fed) and the European Central Bank (ECB) to cut their rates after the summer break.

In terms of monetary policy, the Fed is largely expected to maintain its rates at its July 31 meeting, while investors anticipate the central bank setting the stage for the start of the easing cycle in September.

An interest rate cut by the ECB in September has also been suggested by recent comments from Vice President Luis de Guindos.

The policy divergence between the Fed and the ECB should remain nearly unchanged, with both central banks forecast to cut rates in the next couple of months. However, the expectation of a soft landing in the US economy contrasts with some loss of momentum in the Eurozone's economic recovery, potentially leading to further weakness in European currency in the medium-term horizon.

Moving forward, market participants will closely follow the release of the preliminary Q2 GDP Growth Rate in both Germany and the euro bloc, as well as the advanced Inflation Rate in Germany, all due on July 30.

Gold

Gold price is treading water below $2,400 early Tuesday, as Gold traders turn to the sidelines ahead of a bunch of upcoming high-high macro news from the US and Europe.

Traders seem non-committal and refrain from placing fresh bets on the Gold price, as the policy announcements from the US Federal Reserve (Fed) and the Bank of Japan (BoJ), due on Wednesday, remain in the spotlight.

Besides, they also brace for the Gross Domestic Product (GDP) reports from Germany and the Eurozone slated for release later on Tuesday. Germany is also due to publish its inflation data.

Additionally, the US JOLTS Job Openings data will grab the eyeballs in American trading. These data releases will likely shed light on the state of the economies on both sides of the Atlantic, having a significant impact on the broader market sentiment and the safe-haven US Dollar.

Therefore, Gold price’s fate hinges on the upcoming data flow and the central banks’ policy announcements, with the BoJ likely to debate the timing of the next rate hike while the Fed is seen opening the door for rate cuts.

Gold price witnessed good two-way price action on Monday, initially extending last week’s late recovery before sellers returned on a failure to resist above the $2,400 threshold.

The Asian advance in Gold price could be associated with fresh tensions in the Middle East over the weekend. 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.

Additionally, the US Dollar remained on the back foot alongside the US Treasury bond yields on increased dovish Fed expectations, allowing Gold price to attract buyers. However, in the second half of the day, risk-aversion returned and lifted the demand for the safe-haven US Dollar, triggering a sharp pullback in Gold price from a three-day top of $2,403.

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

(Updated as on 30^th 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:  30.07.2024

Tom Date:   31.07.2024

Spot Date:   01.08.2024

Outlook for the day 30^th July, 2024

Rupee expected to trade in range of 83.62-83.76

MAJOR WORLD CURRENCIES: as on (29^th July, 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 29^th July, 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 29^th July, 2024

Stock Indices

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