CURRENCY OVERVIEW

The rupee closed slightly lower as the U.S. dollar retreated from a two-year high on Friday, but was heading for its third consecutive week of gains, with data showing a slowdown in inflation two days after the Federal Reserve delivered a cut to interest rates. The dollar was down 0.47% on the day against a basket of six other currencies at 107.95 after spiking as high as 108.54 - its highest level since November 2022. It was set to end the week 1% higher. Commerce Department data on Friday showed the personal consumption expenditures price index - the Fed's preferred inflation gauge - rose 0.1% in November after an unrevised 0.2% gain in October. But in the 12 months through November, the PCE price index advanced 2.4% compared with a 2.3% increase in the year to October. The Fed cut interest rates by 25 basis points on Wednesday, with officials indicating that fewer cuts were coming in 2025 as inflation still remained above their targeted range despite its recent downward trajectory. The yield on benchmark U.S. 10-year notes fell 6.2 basis points to 4.508%, after hitting a 6-1/2 month high following the Fed's rate decision. The dollar weakened 0.5% to 0.894 Swiss francs , but was still set for a second consecutive week of gains. The euro edged higher after dipping to a one-month low of $1.03435 on the session, on track for its third straight week of losses, weighed down partly by Trump's comments that the European Union must purchase U.S. oil and gas to make up for its "tremendous deficit" with the world's largest economy, or face tariffs. It was last up 0.31% at $1.0394. The dollar dropped to a five-month low of 157.93 Japanese yen after the Bank of Japan left interest rates unchanged. It was last down 0.65% at 156.4 yen. Sterling dipped to a one-month low of $1.2475 but was last up 0.44% at $1.25575, still on track for a third straight week of losses. The Bank of England (BoE) had kept interest rates on hold on Thursday. The dollar weakened 0.07% to 7.303 Chinese yuan on the offshore market. The Australian dollar weakened 0.03% to $0.6232, while New Zealand's dollar strengthened 0.09% to $0.5635. Oil prices eased on Friday due to a strong dollar and worries about demand growth in 2025, especially in top crude importer China. Brent crude futures were down by 36 cents, or 0.5%, to $72.54 a barrel by 10:54 a.m. EST (1554 GMT). U.S. West Texas Intermediate crude futures also eased 28 cents, or 0.4%, to $69.10 per barrel.

www.eforexindia.com ( login & visit Currency Forecast for detailed analysis)