Currency Map:

USD/INR 74.16 74.41  -0.33
EUR/INR 87.58 88.53 -1.07
GBP/INR 103.16 103.98 -0.78
JPY/INR 67.52 67.89 -0.54

Brent Crude closed at USD 70.30 VS prior week close of USD 75.14. Gold closed at USD 1763.Nifty closed at 16238 vs prior week close of 15763. 10 Year G-SEC Yield closed at 6.23%.

Major developments: USDINR traded in the 74.08-74.43 range and closed at 74.16 as against prior week close of 74.41. Rupee gained 0.33% w/w. EUR declined 1.07% and GBP declined 0.78% w/w against Rupee. Indian benchmark Equity index climbed 3% w/w. 10 Year G-SEC Yield closed at 6.23%. 1 year fwd premia is at 4.20% p.a. In August, till date,, FII’S have net bought Rs 4076 cr in Equity segment and have net bought Rs 81 cr of debt. In this financial year, FII’S have net sold Rs 2939 Cr worth of Indian Equities and have sold Rs 4812 Cr worth of Indian debt. In 2020-21 financial Year, FII’S nett bought Rs 2,74,203 Cr of Equities and have sold Rs  42820 Cr in debt.

RBI kept rates steady. Repo rate was help at 4%. RBI expects GDP growth at 9.5% and inflation at 5.7% for this fiscal.10 year Yield has inched higher to 6.24% despite more GSAP buying.

On data front, Indian PMI(mfrg) climbed to 3 months high reading of 55.3 in July. Indian PMI(services) declined to 45.4 in July. Indian Trade deficit rose to USD 11.2 bn in July. Exports climbed 47.91% y/y to USD 35.2 bn and Imports climbed 59.4% y/y to USD 46.4 bn. GST collections rose to 116393 Cr in July.

Indian Equity indices soared higher and made record highs, aided by rally in Steel, Banking sectors. Indian IIP and CPI data are due for release in coming week.

USDINR could trade in the 74.05-74.60 range. Strong US data could put Rupee under pressure.                                                                                           

Global developments: USD ended higher against majors as strong US jobs data has kindled debate on QE tapering. While jobs and ISM data are supporting hawkish voices, Fed would analyse the impact of fast spreading Delta variant on future prospects.

US non-farm payroll employment grew 943k in July, above expectation of 900k. Prior month’s figure was also revised up from 850k to 938k. Total employment is still down -3.7% from its pre-pandemic level in February 2020. Unemployment rate dropped sharply by -0.5% to 5.4%, versus expectation of 5.7%.

US ISM data showed that mfrg is still strong and services sector is catching up fat. However, spread of Delta variant of Covid poses risk to service sector.

BoE left Bank rate unchanged at 0.10% by unanimous vote. Asset purchase target was held at GBP 895B, by 7-1 vote. BoE also said that GDP is expected to grow by around 3% in Q3, with just a “small negative impact from recent developments in the pandemic”. GDP is projected to “recover further over the remainder of the year”, and reaches its pre pandemic level in 2021 Q4.

ECB said Eurozone economy is “on track for strong growth” in Q3. Manufacturing is expected to “perform strongly” despite supply bottlenecks. Reopening is supporting a “vigorous bounce-back” in services sector. However, Delta variant “could dampen this recovery in services, especially in tourism and hospitality.”

US CPI data is the key focus event for the week.

Currency range forecast: USDINR:74.05/73.90 (support)-74.57(Resistance), EURINR: 86.35(support), 88.10(Resistance), GBPINR: 102(support), 104- Resistance, JPYINR: 66-68.50.  

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