Key highlights

Eurozone economic growth was stronger than previously expected in the first quarter, and employment rose too, showing the Eurozone expanded at the solid pace seen at the end of 2021 despite the war in Ukraine. The EU's statistics office Eurostat said the GDP of the 19 countries sharing the euro rose 0.3% q-o-q in the Jan-Mar period for a 5.1% y-o-y growth.

Britain's jobless rate hit a 48-year low in the first three months of 2022 and employers paid bigger bonuses to keep or attract staff, which added to bets by investors on further Bank of England interest rate hikes. Total pay including bonuses was up 7.0% a year earlier, far above economists' average forecast of 5.4%.

India's wholesale prices accelerated at the fastest pace since at least April 2005, as the Ukraine war and a weak rupee pushed up energy and raw material costs for companies. Annual wholesale price inflation, climbed to 15.08% in April, remaining in double-digits for the 13th month in a row, and higher than the 14.48% forecast in a Reuters poll of analysts.

USD/INR movement

The USDINR pair opened at the 77.67 level. The pair traded within the range of 77.53-77.7875. The pair closed the day at 77.57. The USDINR pair rose today as broader strength in the dollar continued and also as the global crude oil prices continued to trade higher. Global crude prices rose on optimism that China would see significant demand recovery after positive signs that the country's pandemic was receding in the hardest-hit areas. The dollar index shed some ground for the third consecutive session, however, continued to trade above the 103 mark. We have seen the Reserve Bank of India on the receiving side, they seem to have sold spots and cutting long forward positions. Ultimately we may see no reflection in the reserves. Hence we have …

Chart

Global currency updates

The euro traded higher against the US dollar tracking a pullback in the dollar index from recent highs as investors focused on EU GDP numbers and US retail sales data to get direction clues. The positive shift in risk sentiment seems to be provided a boost to the Euro currency. Eurozone economic growth was stronger than previously expected in the first quarter, and employment rose too, better than expected GDP numbers also supported the euro.

The British Pound rose against the dollar following the release of UK labour market statistics that revealed a strong jump in wages and a larger than expected fall in unemployment. The unemployment rate unexpectedly fell to 3.7% from 3.8%, which is the lowest level in 50 years.

Bond market

The yield on the US benchmark 10-year Treasury note climbed as investors awaited a fresh batch of economic data and watched for clues on the path of monetary policy. Domestic bond yields also edged higher tracking the uptick in global crude oil prices. India's 10-year benchmark closed at 7.367%, up 5 basis points from the previous close.

Equity market

Indian equity benchmarks Sensex and Nifty 50 clocked strong gains amid across-the-board buying. Financial, IT, and metal shares were the biggest contributors to the gains in both headline indices. Broader markets mirrored the surge in main indices, with the Nifty midcap 100 and Nifty smallcap 100 gauges rising around 3% each. State-run LIC's shares debuted on stock exchanges BSE and NSE at a discount of around 8% to the issue price.

Evening sunshine

"Focus to be on the FOMC member’s speech and Michigan consumer expectations data due later today."

European stocks advanced as global markets try to build on some positive momentum seen at the start of the new trading week. U.S. stock futures too rose, rebounding from a choppy session Monday, as investors grappled with concerns about the economic outlook amid high inflation. Market participants are likely to monitor Fed speeches. On the data front, retail sales for April will be released, with industrial production figures and capacity utilization data for April. With Finland and Sweden both announcing their bids to join the Western military alliance NATO, all eyes are on Russia and how it might react.

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