Financial Market Overview

USDINR

The Indian rupee opened stronger at 86.2450 against the US dollar on Friday, compared to its previous close of 86.7150 on Wednesday. The Indian Rupee (INR) edged higher on Friday, supported by US President Trump's move to temporarily lower tariffs on several countries, easing trade tensions. Additionally, falling crude oil prices boosted the INR, as lower oil import costs benefit India, the world’s third-largest oil consumer. However, reduced expectations of aggressive rate cuts by the US Federal Reserve (Fed) could limit further INR gains. Markets anticipate the Fed may begin cutting rates in June, with a potential 100 bps reduction by year-end. Investors now await India’s Industrial Output and Manufacturing Output data due later today. In the US, focus shifts to the release of March’s Producer Price Index (PPI), Michigan Consumer Sentiment data, and speeches from Fed officials Alberto Musalem and John Williams.

United States 10-Year rates were 4.454% on the bond markets, while 2-year Treasury yields were 3.828%. The DXY index trading around 99.93.

At the time of writing, the USDINR was trading at 86.20/86.21.

EURUSD

EURUSD currently trading around 1.1320 during Friday’s Asian session. The pair surged to its highest level in nearly two years, closing above 1.1200 for the first time since mid-2023. The US Dollar softened after the Trump administration reversed its tariff plans, easing market tensions. US CPI data for March disappointed, with core inflation cooling to 2.8% — a four-year low — and headline CPI falling to 2.4%. This raised concerns that renewed trade tensions could undo the Fed’s inflation-fighting progress. The week now turns to the University of Michigan’s Consumer Sentiment Index, expected to slip to a near three-year low of 54.5 in April. Markets will also watch for consumer inflation expectations, which remain elevated, with 1-year and 5-year outlooks last seen at 5% and 4.1%, respectively.

At the time of writing, the EURUSD was trading at 1.1337/1.1338.

GBPUSD

GBPUSD extended its bullish momentum on Friday with the pair trading around 1.3035, climbing higher as the US Dollar weakened following softer-than-expected US CPI data. Core CPI fell to 2.8% year-on-year in March — a four-year low — while headline CPI eased to 2.4%, raising concerns about the Fed’s inflation-control efforts amid tariff uncertainties. The Trump administration’s mixed signals on tariffs have further weighed on risk sentiment, allowing the Pound to recover from recent dips. Attention now turns to Friday’s release of the University of Michigan’s Consumer Sentiment Index, expected to decline to a near three-year low of 54.5 in April, reflecting growing consumer pessimism. Markets will also watch for updates on UoM’s 1-year and 5-year consumer inflation expectations, previously at 5% and 4.1%, respectively.

At the time of writing, the GBPUSD was trading at 1.3040/1.3041.

USDJPY

USDJPY stays under pressure near 143.30 in Friday’s Asian session, weighed down by a weaker US Dollar amid rising safe-haven demand for the Japanese Yen. Market uncertainty grew after US President Trump hiked tariffs on China to 145%, while easing duties for other nations. Fears of a global and US recession, driven by aggressive trade policies, continue to drag the Greenback lower. Traders now expect the Fed to cut interest rates in June, with a 44% chance of a rate cut in May, up from 14% last week. Meanwhile, the Bank of Japan’s hawkish stance contrasts sharply with the Fed’s dovish outlook, lending support to the Yen. Japan’s Finance Minister emphasized that excessive FX volatility harms the economy.

At the time of writing, the USDJPY was trading at 143.21/143.23.