TODAY: Tuesday, 25th June, 2024

USD/INR:

The Indian rupee, tracking non-deliverable forwards, is expected to decline slightly at open on Tuesday despite a recovery in Asian peers and the country a logging current account surplus for the first time in 10 quarters.

The one-month non-deliverable forward (NDF) indicate rupee USD/INR will open at 83.48-83.50 to the U.S. dollar compared with a close of 83.46 in the previous session.

Asian currencies rose and the dollar index DXY retreated from multi-week highs. Brent crude, meanwhile, marched to the highest in nearly two months on supply worries.

"The slight opening up move (on dollar/rupee), which NDF is indicating, does not mean much," a currency trader at a bank said.

"Yes, oil is higher. However, that has not been much of a factor of late. And definitely not right now, when we have the index inclusion."

Indian bonds will be included in the widely tracked JP Morgan emerging market index on June 28, spurring inflows of near to $2 billion.

MAJOR WORLD CURRENCIES:

EUR/USD drifted up in a mild recovery from last Friday’s dip into 1.0670. The new trading week is kicking things off with risk appetite firmly pinned higher, sending the US Dollar lower and bolstering the Euro as investors head into a relatively quiet Tuesday.

Fed's Daly: Inflation is not the only risk, but recent inflation readings are more encouraging

Key economic data releases are relegated to later in the week, leaving traders to focus on statements from policymakers that dot the landscape until meaningful data releases kick off in the back half of the trading week. An update to US Gross Domestic Product (GDP) figures is slated for Thursday, with Friday rounding out the trading week with German Retail Sales and the latest update for US Personal Consumption Expenditure (PCE) Price Index inflation.

Fed's Goolsbee: Slowing inflation data would open door to easier policy

Tuesday’s economic calendar is notably restrained, with an appearance expected from German central bank President Joachim Nagel. During Tuesday's US market session, Federal Reserve (Fed) officials are expected to give several speeches, and central planners will likely lean into middling Fedspeak in echoes of Monday’s performances.

German sentiment surveys broadly missed expectations early Monday, but Euro markets are flaunting downside EU figures to follow the broader market higher as risk appetite continues to pin to hopes of at least a quarter-point cut from the Federal Open Market Committee’s (FOMC) September 18 rate call. According to the CME’s FedWatch Tool, rate traders are pricing in around 70% odds of a 25 basis point rate trim from the Fed in September.

GBP/USD:

GBP/USD ground out some bullish chart paper on Monday, climbing from a recent swing low into 1.2650 as markets kicked off the new trading week with risk appetite firmly on the front foot. Key economic data remains limited through most of the week, with Cable traders set to look ahead to high-impact calendar releases that won’t land until later. Gross Domestic Product (GDP) updates for the US and the UK are due in the back half of the trading week, with US Personal Consumption Expenditure (PCE) Price Index inflation numbers slated for Friday.

Fed's Daly: Inflation is not the only risk, but recent inflation readings are more encouraging

Fed's Goolsbee: Slowing inflation data would open door to easier policy

Tuesday's release schedule is strictly mid-tier, leaving markets to churn on statements from central bank policymakers. A smattering of Fedspeak comments sent minor jitters through Monday's markets, with more of the same expected on Tuesday.

Federal Reserve Bank of San Francisco President Mary Daly noted on Monday that 2024’s inflation prints have not inspired much confidence when viewed in the aggregate, though recent prints have shown promise. Fed policymaker Daly’s comments followed on the heels of earlier comments from Federal Reserve Bank of Chicago President Austan Goolsbee, who remains optimistic that further progress on inflation will be forthcoming, noting that the Fed’s policy stance remains appropriately restrictive.

Gold

1.    Gold price (XAU/USD) trades in negative territory on Tuesday despite the weaker Greenback. The stronger-than-expected US Purchasing Managers Index (PMI) released last week triggered Federal Reserve (Fed) officials to push out the timing of the first interest rate cut this year, which continues to cap the gold’s upside. However, the safe-haven flows on the back of geopolitical tensions in the Middle East and Ukraine might boost the yellow metal in the near term.

Investors will take more cues from the Fed members' speeches on Tuesday, with Lisa Cook, Michelle Bowman scheduled to speak. The crucial US economic data to be closely watched this week will be the final reading of the US Gross Domestic Product (GDP) for the first quarter (Q1) on Thursday and the Personal Consumption Expenditure (PCE) Price Index for May, which is due on Friday. Any evidence of a trend of easing inflation could prompt the expectation of Fed rate cuts later in 2024. This, in turn, might drag the Greenback lower and create a tailwind for USD-denominated Gold. 

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

(Updated as on 25^th June 2024, @ 09.00am)

 Cash/Tom:  0.10/0.80                   Cash/Spot:0.20/1.60

 Tom/Spot:  0.10/0.80                    Spot/Next: 0.10/0.80

Cash Date:  25.06.2024

Tom Date:   26.06.2024

Spot Date:  27.06.2024

Outlook for the day 25^th June, 2024

Rupee expected to trade in range of 83.45-83.65

MAJOR WORLD CURRENCIES: as on (24^th June, 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 24^th June, 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 21^th June, 2024

Stock Indices

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