Over this week, traders and commercials would keep a close eye on the upcoming Union Budget. With domestic equity markets trading at an all time high, hopes are sky-high going into the Budget on 10th July. We hope that the FM is able to provide a credible roadmap for fiscal consolidation as well as provide believable steps towards removal of the structural impediments facing the domestic economy. There is little fiscal elbow room but ample scope to be innovative and offer a fresh start to policy making in the country. Indian economy needs tax reform and ease in doing business. A decisive policy document on 10th, will be positive for the Rupee. However, disappointment can also lead to a 0.5/1.00% decline in the currency.
Traders will also keep an eye on the May's industrial growth data from India. In the global markets, there are couple of key economic data points: viz, industrial production stat from France, Japan and UK. UK GDP estimate for the month of June, Chinese trade data, US JOLTS survey and Bank of England policy meeting will also be watched. Over the near term, a range of 59.50/70 and 60.15/30 is expected on spot.
By Anindya Banerjee, currency analyst, Kotak Securities