TODAY Friday,22nd August, 2025

USD/INR:

The Indian rupee weakened further on Friday, extending its late-session slide from the previous day, as the dollar rose ahead of a speech by Federal Reserve Chair Jerome Powell and on renewed concerns of steep U.S. tariffs on local goods.The rupee fell to an intraday low of 87.4850 and was last at 87.4550, compared with its close of 87.27 in the previous session. On Thursday, the currency had briefly climbed past 87 before reversing course in the afternoon to mark its sharpest one-day decline in a month.

Thursday’s move, and then today, shows tariff fears are back on the table after a brief lull referring to the possibility of Washington imposing additional tariffs of up to 50% on Indian goods from August 27."The added uncertainty around Powell's speech just makes it harder for the rupee.The dollar index advanced towards 99 ahead of Powell's comments at the Federal Reserve's annual Jackson Hole symposium, while most Asian currencies were weaker on the day.

Investors are pricing in an over 80% chance of a rate cut at the Fed’s September meeting, but the question is whether Powell will push back against such aggressive expectations.The brokerage reckons that most Fed policymakers who have mixed feelings about cutting rates next month will be willing to support a reduction if Powell presses for one.

MAJOR WORLD CURRENCIES:

USD:

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a flat note around 98.65 during the early Asian trading hours on Friday. Traders await the Federal Reserve (Fed) Chair Jerome Powell’s speech later on Friday, with traders paring back wagers on an imminent interest-rate cut.

Data released by S&P Global on Thursday showed that the US Composite PMI climbed to 55.4 in August, versus 55.1 prior. Meanwhile, the US Manufacturing PMI rose to 53.3 in August from 49.8 in July. This figure came in stronger than the expectation of 49.5. Finally, the Services PMI declined to 55.4 in August from 55.7 in the previous reading but was stronger than the 54.2 expected.

Chicago Fed President Austan Goolsbee said late Thursday that September’s Fed meeting remains open for action. Goolsbee added that the US central bank has been getting mixed messages on the economy, and the Fed still has time to take more data. Cleveland Fed President Beth Hammack noted that it’s important to maintain a modestly restrictive policy to lower inflation, adding that he does not see an imminent case for cutting rates based on current data.

GBP/USD:

GBP/USD moves little after four days of losses, trading around 1.3410 during the Asian hours on Friday. The pair faced challenges as the US Dollar (USD) gained ground following the key economic data from the United States (US) released on Thursday. Traders await Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium in Wyoming to gain clues on the September policy outlook.

The preliminary S&P Global US Composite PMI picked up pace in August, with the index at 55.4 versus 55.1 prior. Meanwhile, the US Manufacturing PMI rose to 53.3 from 49.8 prior, surpassing the market consensus of 49.5. Services PMI eased to 55.4 from 55.7 previous reading, but was stronger than the 54.2 expected. Moreover, US Initial Jobless Claims rose to 235K for the previous week, an eight-week high and above the consensus estimate of 225K, suggesting some softening in labor market conditions.

Strong PMI data paired with rising jobless claims highlights the Federal Reserve’s challenge of weighing persistent inflation pressures against evidence of a softening labor market. According to the CME FedWatch tool, Fed funds futures traders are now pricing in a 74% chance of a rate reduction in September, down from 82% on Wednesday.

EUR/USD:

The EUR/USD pair attracts some sellers to around 1.1595 during the Asian trading hours on Friday, pressured by a rebound in the US Dollar (USD). The German Gross Domestic Product (GDP) for the second quarter (Q2) is due later on Friday. The attention will shift to the Federal Reserve (Fed) Chair Jerome Powell’s speech, with traders paring back wagers on an imminent interest-rate cut.

The soft US July jobs report and big downward revisions to hiring in May and June bolstered hopes of a rate reduction in the Fed September meeting. However, cautious comments from Fed officials and US economic data flashing inflationary risks have tempered those expectations and lifted the Greenback. Still, traders are now pricing in nearly a 75% odds of a 25 basis points (bps) rate cut next month, down from 92% a week earlier, according to the CME FedWatch tool.

Fed Chair Jerome Powell's speech at the Jackson Hole economic conference on Friday could offer some hints as to whether the US central bank will cut interest rates in September. Policymakers will get another month's data on inflation and employment before deciding on interest rates, so Powell may state that he and his colleagues are leaving their options open. A dovish tilt could undermine the USD and create a tailwind for the EUR/USD pair in the near term.

Gold:
Gold (XAU/USD)pares some of its intraday losses on Thursday after sliding to a low of $3,325 during the European session, though the rebound is struggling to clear the $3,350 resistance zone. The stronger US Dollar and firm Treasury yields are keeping bullion capped, with investors reluctant to add fresh positions ahead of Fed Chair Jerome Powell’s keynote at the Jackson Hole symposium on Friday.

At the time of writing, XAU/USD is trading around $3,342 during the American session, having posted an intraday high of $3,352. The price action reflects a cautious consolidation, with traders reluctant to take fresh positions and keeping the metal confined within a narrow range.

The latest S&P Global Purchasing Managers Index (PMI) surveys (August preliminary) highlighted ongoing strength in the US economy. The Composite PMI climbed to 55.4, slightly above July’s 55.1, while the Manufacturing PMI surged to 53.3 from 49.8 in July, beating expectations of 49.5 and marking a return to expansion. The Services PMI eased to 55.4 from 55.7 in July but still topped forecasts of 54.2, signaling resilience in the services sector.

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

(Updated as on 21^st   August , 2025 @ 09.00am)

 Cash/Tom:   0.25/2.75          Cash/Spot:0.35/3.75

 Tom/Spot:    0.10/1.00          Spot/Next: 0.20/2.00

Cash Date:    22.08.2025

Tom Date:      25.08.2025

Spot Date:     26.08.2025

Outlook for the day 22^nd  August: Rupee expected to trade in range of 87.35 to 87.55

MAJOR WORLD CURRENCIES: as on (21^st  August, 2025)

Foreign Currencies

Updated: 17:30 hrs. (12:00 GMT) on 21^st   August 2025

Precious Metals

Updated: 17:30 hrs. (12:00 GMT) as on 21^st  August 2025

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