TODAY: Wednesday, 24^TH April, 2024

USD/INR:

Dollar is trading firm, and USDJPY saw a historical breach of 155 as markets try to push the BOJ to check their limit of tolerance on currency weakness. Dollar Index is at 105.80, with EUR at 1.0705, GBP at 1.2465 and JPY at 155.45. US yields continue to trade with an upward bias, indicating market concerns regarding sustained inflation and moderation in rate cut possibility. US equities ended flattish yesterday, even as futures today are down on the back of weak Meta results and guidance. Indian equities traded in the green yesterday with Sensex ending 0.4% higher but are set of muted open today.

Today’s US GDP and more importantly, tomorrow’s PCE inflation are awaited to further assess the probability of rate cuts for this year. Now the most optimistic scenario is that rate cuts will start in July, and there will be just two cuts this year, as against 5-6 cuts priced during the beginning of 2024. Dollar is fundamentally strong for this reason and by the time the Fed acts on rates, other central banks such as the ECB would also have firmed up their rate cut plans and hence there is not much upside to crosses such as EUR in the coming months. JPY continues to have an impact on the Rupee, in that a meaningful appreciation can all but be ruled out due to the relative weakness of Asia FX correlating with the JPY.

INR is set for yet another day of meandering behavior today, and unless tomorrow’s PCE blows away expectations on either side, the next key data point will be the US jobs data next month.

MAJOR WORLD CURRENCIES:

USD:

GBP:

GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter. 

After moving sideways above 1.2450 in the Asian session on Wednesday, GBP/USD lost its traction and declined below this level. The near-term technical outlook suggests that the pair has lost its recovery momentum but buyers could remain interested as long as 1.2400 support stays intact.

The broad-based selling pressure surrounding the US Dollar (USD) provided a boost to GBP/USD in the second half of the day on Tuesday, allowing the pair to snap a three-day losing streak.

The S&P Global Composite PMI in the US declined to 50.9 in April's flash estimate from 52.1 in March, showing that the business activity in the private sector expanded at a softening pace. Furthermore, the details of the PMI survey highlighted easing price pressures.

"The deterioration of demand and cooling of the labor market fed through to lower price pressures, as April saw a welcome easing in rates of increase for selling prices for both goods and services," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

March Durable Goods Orders data from the US will be looked upon for fresh impetus later in the day. Although this has not been a market-moving data recently, the market reaction to Tuesday's disappointing PMI report suggests that a weak print could weigh on the USD.

EUR:

 EUR/USD meets fresh demand and rises toward  1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data. 

EUR/USD gained traction and climbed to its highest level in over 10 days above 1.0720 early Thursday. The pair's technical outlook suggests that the pair has more room on the upside before turning overbought in the near term.

The renewed selling pressure surrounding the US Dollar (USD) helps EUR/USD hold its ground in the European trading hours. Although US stock index futures trade deep in negative territory, the USD struggles to find demand.

The Nasdaq Futures were last seen losing more than 1% on the day. This, however, seems to be a product of the sharp decline seen in technology shares following disappointing earnings reports, rather than a general risk aversion.

Later in the day, the US Bureau of Economic Analysis will release its first estimate of the annualized real Gross Domestic Product (GDP) growth for the first quarter. Investors expect the US economy to grow 2.5% following the 3.4% expansion recorded in the last quarter of 2023.

In case the data shows that the US economy grew at a softer pace than forecast in Q1, the initial reaction could cause the USD to continue to weaken against its rivals. On the other hand, a GDP reading at or above the market expectation could support the USD and weigh on EUR/USD.

Gold

Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.

Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited. The US Dollar (USD) meets with a fresh supply and hangs near its lowest level in over a week. This, along with a slight deterioration in the global risk sentiment, lends some support to the safe-haven precious metal. Traders, however, might prefer to wait for more cues about the Federal Reserve's (Fed) rate cut path before placing aggressive directional bets. 

Hence, the focus will remain glued to the key US macro data – the Advance Q1 GDP report due later today and the Personal Consumption Expenditures (PCE) Price Index on Friday. The latter will play a key role in influencing market expectations about the Fed's future policy decisions, which, in turn, will drive the USD demand and provide some meaningful impetus to the Gold price. This makes it prudent to wait for strong follow-through buying before confirming that the corrective slide from the all-time peak has run its course and positioning for further gains. 

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

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

 Cash/Tom:    0.20/0.70                  Cash/Spot: 0.80/2.80

 Tom/Spot:     0.60/2.10                  Spot/Next:  0.20/0.70

Cash Date:   25^th   April   2024

Tom Date:     26^th   April   2024

Spot Date:    29^th   April    2024

Outlook for the day 25^th April, 2024

Rupee expected to trade in range of 83.20-83.50

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

Foreign Currencies

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

Precious Metals

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

Stock Indices

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