US Inflation and Job Data Boost Rate Cut Expectations

 Key inflation and job indices now indicate a US economy that, according to the Fed Chief, is much more balanced. Delaying rate cuts could jeopardize the prospects of a soft landing. Political pressure is also mounting ahead of the November elections.

USD Outlook: The medium-term outlook for the US Dollar remains positive, with major currencies likely to trade with a depreciating bias: CNH (due to a weaker economic outlook), JPY (due to higher yields on USTs), and EUR and GBP (due to political uncertainties). With rising crude prices and weaker Asian currencies, USDINR should be bought on dips. Expected Range: 83.35 – 83.70.

Euro Outlook: EURUSD has seen significant correction due to concerns over the French elections and recent weak economic data. We expect the Euro to make new lows towards 1.0485 if it breaks 1.0685. This view is negated if EURUSD gives a daily close above 1.0785.

Please find the latest edition of our market report, which includes inputs from our sales and trading teams. The report provides insights into how recent data and events have impacted the markets and how pricing levels are being recalibrated. In the "Trades We Like" section, we discuss trade ideas that make the most sense in the current economic environment. Refer to the full report attached here for all the insights. Happy reading!