The week event was dominated by actions of major Central banks. While Fed maintained status quo, BOE cut rates by 25 bps and BOJ increased rates by 25 bps. JPY\u2019S massive gains, melt down in US stocks and steep fall in US Yields are major reactions to weak Global data and to central banks actions.<\/span><\/b><\/p>\r\nFed kept interest rates unchanged at 5.25-5.50%, as widely anticipated, with a unanimous vote. The accompanying statement closely mirrored June\u2019s guidance for future decisions, maintaining that the Fed is \u201cprepared to adjust the stance of monetary policy as appropriate.\u201d<\/b><\/p>\r\n
Fed emphasized that its assessments will consider a \u201cwide range of information,\u201d indicating that it is keeping its plans for potential rate cuts close to the chest for now.<\/b><\/p>\r\n
On the economic front, Fed acknowledged that job gains have \u201cmoderated\u201d and the unemployment rate has \u201cmoved up.\u201d Additionally, the statement noted \u201csome further progress\u201d in reducing inflation towards the target. Fed also mentioned that risks to inflation and employment are continuing to \u201cmove into better balance.\u201d<\/b><\/p>\r\n
On data front, US ISM (mfrg) and employment data triggered fears of recession.\u00a0<\/b>US ISM Manufacturing PMI dropped from 48.5 to 46.8 in July, falling below the expected 48.8. This marks the fourth consecutive month of contraction for the manufacturing sector, with the decline accelerating.<\/span><\/b>\u00a0<\/span>Historically, the relationship between the Manufacturing PMI and the overall economy suggests that the July reading of 46.8 corresponds to a change of plus-1.2 percent in real GDP on an annualized basis.<\/span><\/b><\/p>\r\nUS non-farm payroll employment grew only 114k in July, well below expectation of 176k. That\u2019s all well below average monthly gain of 215k over the prior 12 months. Unemployment rate jumped from 4.1% to 4.3%, above expectation of 4.1%. Participation rate ticked up by 0.1% to 62.7%. Average hourly earnings rose 0.2% mom, below expectation of 0.3% mom. Annual wages growth slowed from 3.8% yoy to 3.6% yoy, below expectation of 3.7% yoy.<\/b><\/p>\r\n
The market\u2019s reaction to mfrg and employment reports has shifted expectations towards more aggressive monetary easing. Investors are now starting to bet on a 50bps rate cut by Fed in September, and more rate cuts in Nov and Dec. However, rather than cheering the potential for fast monetary easing, investors seem more concerned about a looming recession.<\/b><\/p>\r\n
BoJ raised the uncollateralized overnight call rate from 0-0.10% to around 0.25%.<\/b>\u00a0BoJ stated that economic activity and prices have been \u201cdeveloping generally in line with the Bank\u2019s outlook.\u201d Moves to raise wages have been spreading, and the annual rate of import price growth has \u201cturned positive again,\u201d with upside risks to prices requiring attention. It also noted if the outlook presented in the July Outlook Report is realized, BoJ will continue to raise the policy interest rate and adjust the degree of monetary accommodation accordingly.<\/b><\/p>\r\n
BOE cut rates by 25 bps to 5%, but cautioned against expectations of series of rate cuts.<\/span><\/b>\u00a0<\/span>BoE acknowledged the risk that inflationary pressures from second-round effects could prove more enduring in the medium term. Balancing these factors, the BoE said it is now appropriate to reduce the degree of policy restrictiveness \u201cslightly.\u201d The central bank repeated, however, that \u201cmonetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.\u201d And finally, the BoE said it will decide the appropriate degree of monetary policy restrictiveness at \u201ceach\u201d meeting.<\/span><\/b><\/p>\r\nAccording to BOE, GDP is expected to grow by 1.2% in 2024 and headline inflation is expected to creep to 2.7%.<\/span><\/b><\/p>\r\nUS Yields declined over 20 bps and Equity markets collapsed. USD declined against majors.<\/span><\/b><\/p>\r\nJapanese stock market index decline continued with Nikkei falling 5% on Friday. Yen has swiftly gained to 146.50 as carry trades are being unwound.<\/span><\/b><\/p>\r\nCurrency technical levels<\/b>: USDINR: 83.56\/83.32 (Supports), 83.90 (resistance),<\/b><\/b><\/p>\r\n
EURINR:91.50\/92.25(Resistance),90.40\/90.10(Support),<\/b><\/p>\r\n
GBPINR: Supports: 106.50( supports), Resistance:109(Resistance).<\/b><\/p>\r\n
JPYINR: Resistance:57.70, Supports: 55.50 (support).<\/b><\/p>\r\n
Hedging advise<\/b>: USDINR imports be hedged on decline to 83.55. EUR nearby payables be covered on dips. GBP receivables can be covered at 109+.<\/b><\/p>\r\n
Click to open an Account<\/strong>\u00a0:\u00a0https:\/\/ekyc.gwcindia.in\/client\/<\/a><\/p>\r\nFor all your investment needs feel free to reach us.<\/strong>\r\n\r\n
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Give us Missed Call us on 90037 90027 . For Support : 044-40329999<\/strong><\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>","protected":false},"excerpt":{"rendered":"FX Weekly Currency Score Week 32 Weekly SYNOPSIS: 02\/08\/2024 Currency Map: Currency Pairs WEEK CLOSE PRIOR WEEK CLOSE % change USD\/INR 83.75 83.74 \u00a0 EUR\/INR 90.46 90.86 -0.44 GBP\/INR 106.64 107.86 -1.13 JPY\/INR 56.15 54.48 3.06 Brent Crude closed at USD 80.50 VS previous month close of USD 77.50. Gold closed at USD 2442. Nifty […]<\/p>\n","protected":false},"author":6,"featured_media":6973,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"image","meta":{"_acf_changed":false,"footnotes":""},"categories":[36],"tags":[],"class_list":["post-7036","post","type-post","status-publish","format-image","has-post-thumbnail","hentry","category-currency-update","post_format-post-format-image"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/7036","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/comments?post=7036"}],"version-history":[{"count":3,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/7036\/revisions"}],"predecessor-version":[{"id":8369,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/posts\/7036\/revisions\/8369"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media\/6973"}],"wp:attachment":[{"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/media?parent=7036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/categories?post=7036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gwcindia.in\/blog\/wp-json\/wp\/v2\/tags?post=7036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}