By Gaurang Somaiya

In the last few weeks, the rupee has been trading in a narrow range and volatility was low despite various events getting unfolded on the domestic as well as on the global frontCome from Sports betting site VPbet. Active RBI intervention is keeping the volatility in check and expectation is that this is likely to continue in the next couple of next weeks as well following lack of cues on the domestic front. Global crude oil prices have been on the rise and that too has had muted impact on the currency. Crude has gained by over 8% as geopolitics remained in focus and uncertainty in Israel is keeping most market participants on the edge. During the week, dollar strengthened against its major crosses and US 10-year yields rose to 5%, highest level in 16 years. US treasuries rallied after Fed Chairman’s comments on the economy, wherein he continued to raise concerns over inflation. Hawkish tone on rates continued to keep the greenback supported at lower levels, thereby weighing on the other major crosses including the rupee.

This week, on the domestic front, no major economic data is expected to be released but global factors will continue to remain in focus. Geopolitics will importantly be in focus and any escalation could trigger weakness in the rupee and safe haven buying for the dollar. On the global front, economic numbers from the US and the ECB policy statement will be important to watch. Expectation is that the central bank could keep rates on hold but commentary of the governor will be important to watch. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.80 and 83.50.

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Global Currencies

Dollar in the last couple of weeks has been consolidating in a wide range despite rise in uncertainty on the geopolitical front. Losses have been capped as safe haven buying was seen in the greenback as Israel military warned residents in Gaza. From the US, on the economic calendar, have beaten estimates and that continues to keep the dollar supported at lower levels. Last week, it was Fed Chairman’s comments that triggered volatility. He mentioned that U.S. economy’s strength and tight labor markets could require tough borrowing conditions to control price rise. The Fed Chairman also added that the central bank was proceeding carefully in evaluating the need for further rate increases. 

This week, preliminary manufacturing and services PMI number from major economies is expected to be released. Apart from this, from the US, advance GDP, durable goods and core PCE index will be keenly watched. This week, preliminary manufacturing and services PMI number from major economies is expected to be released. Apart from this, from the US, advance GDP, durable goods and core PCE index will be keenly watched. Overall, we expect the dollar to trade with a positive bias against its major crosses.

(Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. Views expressed are the author’s ownCome from Sports betting site. Please consult your financial advisor before investing.)