Last Updated on: 10/05/2024
TODAY: FRIDAY, 10th May, 2024
USD/INR:
INR likely to open around 83.45/50
Dollar is trading subdued after overnight after higher than expected jobless claims provided cues that the US labor market is softening. Dollar Index is at 105.30, with EUR at 1.0775, GBP at 1.2515 and JPY at 155.70. US 10y yield is down 5 bp, trading at 4.45%. US yields remain buoyant and yesterday another 0.8% jump in the DOW, though the tech basket rose more modestly. Indian indices saw deep cuts yesterday. Nifty fell 1.5% and broader market indices also cracked 1.7%+.
The deepening correction in Indian equities is a sign that markets are genuinely concerned about election results. With each phase, uneasiness about the low voter turnout is translating to sharp risk aversion in markets. Given the fact that the Congress manifesto mentions wealth survey and potential moves towards some sort of redistribution, the reaction in markets to a BJP loss/hung parliament could be significant.
Until the elections, it is likely that the Rupee will continue to be pressured by waning risk appetite, irrespective of the global developments. Next week’s CPI is important for the global Dollar, given the recent softness in jobs data. Signs that inflation is easing again towards the Fed’s target will augur well for the Risk assets, but the Rupee will feel the weight of elections more for the time being.
MAJOR WORLD CURRENCIES:
USD:
The dollar weakened against most currencies on Thursday after economic data showed more signs of softening in the U.S. labor market, while the pound rebounded from earlier lows after the Bank of England opened the door for an interest rate cut.
Weekly initial claims for state unemployment benefits increased 22,000 to a seasonally adjusted 231,000, the highest level since the end of last August and above the 215,000 expected by economists in a Reuters poll.
The data followed last week's weaker-than-anticipated U.S. payrolls report and other data that showed job openings fell to a three-year low in March.
The dollar index, which measures the greenback against a basket of currencies, fell 0.22% at 105.28, with the euro up 0.28% at $1.0775.
Sterling strengthened in the wake of the U.S. data and was last at 0.18% at $1.2518. The pound had dropped to a low of $1.2446, its weakest level since April 24, after the Bank of England (BoE) paved the way for an interest rate cut.
The BoE's Monetary Policy Committee had voted 7-2 to keep the central bank's key policy rate at a 16-year high of 5.25%, with Deputy Governor Dave Ramsden joining Swati Dhingra in voting for a cut to 5%. BoE Governor Andrew Bailey said it was possible the central bank would need to cut rates by more than investors expect.
GBP:
Following BOE-inspired slump on Thursday, the British Pound changed course and trades around 1.2530. Better-than-anticipated UK GDP and a weaker USD behind the advance.
However, the Pound Sterling (GBP) encountered challenges following the Bank of England’s (BoE) decision to maintain the interest rate at 5.25% on Thursday. Reuters reported that BoE Governor Andrew Bailey mentioned during the post-decision press conference that "a rate cut next month was a possibility," but he intends to wait for inflation, activity, and labor market data before deciding. This has raised the prospect of future rate cuts, putting pressure on the British Pound and weakening the GBP/USD pair.
Subsequently, the US Bureau of Labor Statistics (BLS) released data indicating that the number of individuals filing for unemployment benefits surpassed expectations. Initial Jobless Claims for the week ending May 3 rose to 231,000, exceeding estimates of 210,000 and showing an increase from the previous week's reading of 209,000. This suggests a potential shift toward a less hawkish policy outlook by the Federal Reserve (Fed), resulting in pressure on US Treasury yields and undermining the US Dollar (USD).
On Friday, the preliminary Michigan Consumer Sentiment Index is forecasted to show a slight decrease in May. This index is a survey that evaluates sentiment among US consumers, encompassing three primary areas: personal finances, business conditions, and buying conditions.
EUR:
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar (USD) gains ground due to the expectations of the Federal Reserve’s (Fed) prolonging higher interest rates. However, the softer US labor data from the last week has reignited hopes for potential interest rate cuts by the Federal Reserve (Fed) in 2024.
On Tuesday, hawkish comments from Minneapolis Fed President Neel Kashkari have bolstered the US Dollar, consequently weakening the EUR/USD pair. Kashkari said that the most probable scenario is for rates to remain unchanged for an extended period. However, if disinflation returns or a significant weakening in the job market occurs, rate cuts could be considered.
In the Eurozone, Retail Sales (MoM) surged by 0.8% in March, rebounding from the upwardly revised 0.3% decline in February. This exceeded the expected increase of 0.6%. It marked the most significant increase in retail activity since September 2022, indicating strength in the European consumer sector. Additionally, Retail Sales (YoY) increased by 0.7% compared to the revised 0.5% drop in February. This indicates the first growth in retail since September 2022, signaling a positive shift in consumer spending trends.
The European Central Bank (ECB) is expected to begin reducing borrowing costs in June. As reported by the Business Standard, Chief Economist Philip Lane of the ECB said that recent data have strengthened his belief that inflation is edging closer to the 2% target. While many ECB officials appear to support easing measures next month, President Christine Lagarde has not suggested further cuts at this point.
Gold
XAU/USD accelerated its recovery on Friday, as investors drop the USD. Dismal US employment-related figures revived hopes for a soon-to-come rate cut from the Fed.
Gold price (XAU/USD) gains momentum on Friday despite the modest rebound in US Dollar (USD). The yellow metal edges higher as many economists expect a weakening labor market could prompt the Federal Reserve (Fed) to cut interest rates sooner than currently expected to stimulate economic growth. Furthermore, the renewed geopolitical concerns are likely to be a positive factor for gold’s value on the market. However, the hawkish US Fed talks on the interest rate, and the stronger US dollar (USD) might weigh on gold prices. Gold traders will keep an eye on the first reading of the US Michigan Consumer Sentiment Index for May, along with the speeches from the Fed’s Bowman, Goolsbee, and Barr. Next week, the US Consumer Price Index (CPI) report will be in the spotlight.
USD/INR as on 10th May, 2024
Currency
OPEN
HIGH
LOW
CLOSE
USD/INR
83.48
83.5125
83.4375
83.5025
Forward premium (%) as on 09th May , 2024
Periods
1 Month
3 Month
6 Month
12 Month
Premium
1.16/1.30
1.27/1.32
1.41/1.43
1.70/1.72
USD/INR Cash/Tom/Spot Levels: (in Paisa)
(Updated as on 10th May 2024, @ 09.00am)
Cash/Tom: 0.50/1.50 Cash/Spot: 0.60/2.20
Tom/Spot: 0.10/0.70 Spot/Next: 0.10/0.70
Cash Date: 10th May 2024
Tom Date: 11th May 2024
Spot Date: 12th May 2024
Outlook for the day 10th May 2024
Rupee expected to trade in range of 83.40-83.60
MAJOR WORLD CURRENCIES: as on (09th May, 2024)
CURRENCY
GBP
1.2489
1.2526
1.2443
1.2522
EUR
1.0749
1.0784
1.0722
1.0781
AUD
0.6577
0.6621
0.6563
0.6619
JPY
155.48
155.95
155.15
155.46
CHF
0.9076
0.9098
0.9053
0.9058
XAU
2308.59
2347.19
2306.54
2345.8845
Foreign Currencies
Updated: 17:30 hrs. (12:00 GMT) on 9th May, 2024
USD/INR: 83.5050FXIR]
Against
USD
INR
1 EUR =
1.0759
89.8457
1 GBP =
1.2502
104.4011
100 JPY =
155.71
53.6301
1 AUD =
0.6603
55.14
1 CHF =
0.9073
92.0396
Precious Metals
Updated: 17:30 hrs. (12:00 GMT) as on 09th May, 2024
Gold ($/oz)
2325.7
Silver ($/oz)
27.63
Stock Indices
Index Close
08th May, 2024
09th May, 2024
BSE Sensex
73466.39
72404.17
NSE Nifty
22302.50
21957.50
Dow Jones
39056.39
39387.76
NASDAQ
16302.76
16346.26
Major Economic Data Releases for the Day
Date
Region
Time (IST)
Description
10.05.2024
11.30am
GDP m/m
07.30PM
Prelim UoM Consumer Sentiment
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