Morning Market Starter August 30, 2024

Economic Research Group Economic Research Group

For private circulation only

Euro-zone economic sentiment was flat in September Key Developments:

(Index) Eurozone economic sentiment
 The US GDP for Q22024 was revised higher from 2.8% QoQsaar to 3% reflecting upward revisions
100
that were made in private consumption from 2.3% to 2.9% that negated the effect of downward
98 96.6 revisions that were made in other categories.
96  The ECB chief economist Lane stated that wages in the Euro-zone could slow sharply in 2025 and
96 2026 that could pave the way for monetary easing. However, Governing Council member Nagel
94
stated that the central bank must not cut rates too quickly given that inflation remains above the
92 2% threshold.
 Global agencies Moody's and Fitch have expressed positive views on India's economic prospects.
90
Moody's raised India's GDP growth forecasts to 7.2% for 2024 and 6.6% for 2025, while Fitch
Mar-23

Mar-24
Sep-22

Dec-22

Sep-23

Dec-23

Sep-24
Jun-23

Jun-24

projects 7.2% growth this fiscal year and 6.5% for FY26. Fitch affirmed India's 'BBB-' rating with
a stable outlook on strong growth outlook and fiscal credibility.
 RBI's Deputy Governor T Rabi Sankar addressed the Global Fintech Festival 2024, discussing the
Source: Bloomberg, ICICI Bank Research
need for Self-Regulatory Organisations to regulate the fintech sector. He emphasised the
importance of trust and integrity in the unregulated industry and highlighted the potential for
growth with public-private partnerships and technological innovations.
 RBI's MPC member Prof. Ashima Goyal said that credit-deposit ratio of Indian banks is lower than
several global banks. She further stated that the rise in non-performing assets in certain areas,
such as personal credit, can be managed through targeted prudential regulations.

Global Market Developments:

 JN: Industrial production increased to 2.8% MoM in July from -4.2% MoM in the previous month. Retail
sales decreased to 2.6% YoY in July from 3.8% YoY and the previous month.
 EC: Economic confidence increased to 96.6 in August from 96 in the previous month.
 US: Initial jobless claims stands at 231K in the fourth week of August from 236K in the previous week.
Similarly, Continuing claims increase to 1868K in third week of August from 1855K in the previous
month.
 US stock markets traded higher in the previous session: S&P 500 (0.00%) and Dow Jones (+0.59%)
 Asian stock markets are higher this morning: ASX (+0.35%) Nikkei (+0.60%) Kospi (+0.50%) Hang
Seng (+1.05%), Shanghai Composite Index (+0.19%) are trading in green
 US treasuries are trading higher this morning: The 10 Yr US yield is trading at 3.865% vs 3.868% in
the previous trading session.
Domestic market developments:
 The INR closed at 83.87 against the USD versus 83.96 from the previous session.
 Yield on the 10-year sovereign bond yield ended at 6.86% unchanged from the previous session.
Source: Bloomberg, ICICI Bank Research
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Remarks
DXY The US dollar index DXY is trading flat this morning. The index rose last night after US GDP growth was revised upwards in the second estimate released
yesterday. Market focus today will be on Core PCE index and Michigan Consumer sentiment due today.
EUR/USD The EUR/USD pair is trading with an upside bias as investors recover some of their losses from yesterday's sharp fall. German inflation printed lower than
expected and faltering Eurozone consumer confidence put downwards pressure on the pair. Investors will respond to Eurozone inflation figures due today.

GBP/USD The GBP/USD pair is trading flat. Given the lack of domestic elements, the GBP’s losses were driven by the strong USD trend after the US GDP was revised
upwards. We see broad consolidation in the near-term.
USD/JPY The USD/JPY pair is trading lower driven by a down tick in UST yields this morning and improving industrial production in Jap an. However, lower than
expected retail sales and higher unemployment rate will put some upwards pressure on the pair. Investors will react to the housing starts data in Japan
due today, in addition to USD price dynamics post PCE index release in US.
USD/CNY The USD/CNY pair is trading with a firm downside against USD, as traders await key data on US inflation and Chinese manufacturing PMI due soon.
PBOC set the USD/CNY central rate at 7.1124, as against the previous day's fix of 7.1280.
AUD/USD The AUD/USD pair is trading range bound trading as traders responded to the US GDP release. We expect the pair to move in sync with overall risk
sentiment.

USD/CAD The USD/CAD pair trades with an upside after the second estimate of US GDP for Q2 2024 came in better-than-expected, growing by 3.0% vs. 2.8%
previously. Higher crude oil prices could support the pair capping a further upside bias.
Indian Equities The benchmark indices are expected to open higher following gains in global markets. Market participants will await the US PCE and domestic GDP due
today. We expect indices to continue its momentum given India's rating being maintained globally and strong medium term growth outlook.
Indian Rupee The USD/INR pair is likely to open flat given a mixed trends in global markets. Today, investors will remain cautious ahead of US PCE that will further give
hints for Fed rate cut. Any sharp change in the pair will be intervened by RBI
India G-Sec The government bond yield is likely to open mixed as investors awaits for key domestic data due today to take fresh position.

Oil (Brent) Oil prices held steady, reflecting a cautious market sentiment as investors weighed conflicting factors. On one hand, ongoing tensions in the Middle East
(USD/bbl.) have raised concerns about potential supply disruptions, which could drive prices higher. On the other hand, signs of weakening global demand, potentially
linked to economic slowdown, are exerting downward pressure on prices
Gold (USD/oz.) Gold prices are holding steady as Investors are waiting for important U.S. inflation data that could influence future interest rate decisions.

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Economics Research Group

Economics Research
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