Globally, risk rally in financial markets took a breather after the release
of FED meeting minutes on Wednesday. FED official raised the growth concerns in
US economy amid pandemic and need of fiscal stimulus. Consequently, EUR/USD
pair tested key support near 1.18 handle before rebounding to 1.1860 level.
Overall, risk rally likely to resume with a mild recovery in Dow and Asian indices
trading in green. EUR/USD pair will take further cues from Europe and US PMI
data, due to release later during the day.
On the domestic front, Reserve bank of India’s MPC’s meeting minutes underlined
shortcoming of inflation targeting regime in India (owing to over-dependence on
food inflation, which is more driven by supply-side). While the economy is
reeling under pandemic, RBI might have to take a course correction to stem CPI
inflation. It is noteworthy that CPI inflation has surged to 6.93% in Jul
primarily on account of food inflation, which surged to 9.6%. USD/INR pair is likely
to open near 74.95 levels. Technically, USDINR pair is forming a contracting
triangle formation, a break above 75.20 can lead to a substantial rally in the
pair. The range for the day is 74.85-75.13.
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