Dollar buoyed by inflation and safe haven demand, geopolitical risks pile on

(15th April 2024, 8:00 AM)

 

INR likely to open around 83.45

Risk appetite remained shaky on Friday, as sticky inflation and caution from Fed members kept markets on edge. Underwhelming bank earnings also contributed, resulting in a sharp crack in US equities. Dollar is sharply higher, with the Dollar Index at 106. EUR is at 1.0650, GBP is at 1.2460 and JPY is at 153.75. USDINR traded 83.60+ in NDF on Friday. The escalation in the Iran-Israel conflict has added to jitteriness in markets, but not enough to cause an all-out panic. US futures indicate stability for now.

The global environment has moderately deteriorated against risk assets, and safe-haven demand could also contribute to more Dollar strength from hereon if the war escalates. The macro data out of the US will keep markets guessing on rate cuts and keep INR under pressure. Today’s USDINR behavior can provide clues on RBI’s resolve and intent, especially given the JPY depreciation and souring global sentiment. This week has US retail sales and EU inflation in focus, and hawkish data points can create more pressure for the Rupee.

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