TODAY: Thursday, 08^th August, 2024

USD/INR:

 Dollar is steady as markets remain calm after the Monday storm. Even as Japanese Indices managed to clawback significant portion of the Monday losses yesterday, US markets managed a moderate green close and Indian markets traded in the Red. USDJPY has lost momentum and is stable around 145.

Dollar Index is at 102.95, with EUR at 1.0925, GBP at 1.27 and JPY at 145. Nikkei is in moderate green, but USDJPY is giving signals of again topping out, which implies another bout of market fall could be on the cards unless BOJ intervenes. DOW closed 0.75% yesterday and NASDAQ ended 1%+ higher. Indian markets opened in the green, but closed in red. Sensex was down 0.2%. Yesterday’s Indian equity market behaviour indicates willingness to sell-off – a sign of frothiness and overvaluation.

The possibility of another sharp fall remains tangible, especially if the BOJ continues to try and keep their hawkish narrative going. While US recession fears remain central to the current narrative, the key is the FOMC stance in the coming days, and the extent to which markets could force the FOMC on rate cuts.

MAJOR WORLD CURRENCIES:

GBP/USD tested waters on the high side on Wednesday but settled the day where it started just south of the 1.2700 handle. Markets are struggling to shrug off a broad downside shock kicked off late last week after a raft of US data came in below expectations, reigniting fears of a steep US recession looming over the horizon.

Investors have recovered their balance, but recovery remains a limited affair as Cable treads water. Meaningful economic data remains limited heading through the rest of the week, leaving investors to grapple with hopes for a 50 basis point rate cut from the Federal Reserve (Fed) in September.

Cable traders will be looking ahead to next week’s UK labor figures and an update to US Producer Price Index (PPI) inflation. UK and US Consumer Price Index (CPI) inflation is also in the barrel for next week, as well as UK Gross Domestic Product (GDP) growth and US Retail Sales.

EUR/USD:

EUR/USD paddled in a tight circle on Wednesday, churning just above the 1.0900 handle as Fiber traders take a breather from recent volatility sparked by a misprint in key US data last week. EUR/USD flubbed a bullish dash for 1.1000, leaving bids hung out to dry.

The rest of the trading week sees limited meaningful economic calendar releases, leaving Federal Reserve (Fed) rate cut bets as the key market driver. Traders get a breather of high-impact data until next week, which sees US Producer Price Index (PPI) inflation next Tuesday, followed by European Gross Domestic Product (GDP) growth on Wednesday alongside US Consumer Price Index (CPI) inflation.

Gold

Despite a cautious market mood, in the face of resurfacing Middle East geopolitical tensions, the USD remains broadly subdued. A pullback in the US Treasury bond yields drags the Greenback lower. Risk-off flows return and lift the demand for the US government bonds, knocking down the yields while lifting Gold price.  

Citing two sources familiar with intelligence on the matter, CNN News reported late Wednesday that Hezbollah appears increasingly set to act against Israel “independent” of an expected Iranian response to the recent killing of two terror leaders. According to CNN, multiple officials say Iran seems to still be hashing out its retaliation plans.

Meanwhile, markets speculate over aggressive US Federal Reserve (Fed) easing this year, as economic slowdown risks lurk, keeping the downbeat tone intact around the US Dollar. Markets are now pricing in a 75% chance of the Fed cutting rates by 50 basis points (bps) in September, the CME Group's FedWatch tool showed, with major brokerages also anticipating a large rate cut in the next meeting, per Reuters.

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

(Updated as on 08^th August, 2024, @ 09.00am)

 Cash/Tom: 0.05/0.75                   Cash/Spot:0.30/2.50

 Tom/Spot:  0.25/1.75                    Spot/Next: 0.05/0.75

Cash Date:  08.08.2024

Tom Date:   09.08.2024

Spot Date:   12.08.2024

Outlook for the day 08^th  August, 2024

Rupee expected to trade in range of 83.85-84.00.

MAJOR WORLD CURRENCIES: as on (07^th August, 2024)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 07^th August, 2024

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 07^th August, 2024

Stock Indices

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