Daily Market Overview – 22 May 2025

FOREX

USD/INR Outlook: On Thursday, 22 May 2025 USDINR commenced at 85.59/60 levels after Indian Rupee closed at 85.5850 per Dollar on Wednesday (21 May) , driven largely by movements in the domestic equity market and a slight correction in the US Dollar.

• Intraday Range: 85.30 – 85.70 (targeting 86.00)

• Strategy for Importers: Buy on dips

The US Dollar Index marked its third consecutive decline, reaching its lowest point in two weeks, as concerns over the US fiscal outlook continue to grow. Market sentiment weakened after President Trump’s tax bill failed to gain support, compounded by Moody’s downgrade of the US credit rating. Additionally, Fed officials expressed concerns over risks stemming from US trade policies, a softening labor market, and the potential for stagflation.

Eurozone Update: The Euro saw positive movement, gaining against the US Dollar. EUR/USD climbed to a two-week high of 1.1370 on Wednesday before pulling back slightly, now trading around 1.1330. A significant factor in this rise was a strong current account surplus in the euro area, which reached EUR 51 billion in March, up from EUR 41 billion in February. This surplus was driven by a rising goods trade surplus and primary income, boosting confidence in the Eurozone’s economic health.

INDIAN EQUITY MARKET

Indian Market Sentiment:Indian indices are currently trading below their 5-day moving averages (5DMA), taking cues from a steep overnight decline in Wall Street. The focus remains on heightened concerns regarding the US economy and government debt, with the technology sector taking the brunt of losses.

• Nifty 50: Weekly expiry volatility expected

• Sensex: Trading below the 5DMA

• Nifty Bank: Holding above the Donchian Median but trading below the 5DMA

INDIAN BONDS MARKET

Treasury Yields–India: Short-term Indian Government Treasury yields (3M/6M) are seeing an uptick, despite long-term yields remaining stable due to easing inflationary pressures.

COMMODITY OVERVIEW

• Metals: Mixed performance, with copper (+1.28%), platinum (+0.45%), silver (+0.51%), and tin (+0.62%) showing demand-side strength. On the flip side, aluminium (-0.23%), lead (-0.51%), and nickel (-0.37%) faced corrections.

• Energy & Grains: Both energy futures and grain futures are trading close to parity levels, reflecting a balance in supply-demand dynamics.

Summary:

• USDINR to start the day between 85.55-60, with a focus on potential dollar correction and equity market movements.

• EUR/USD continues to benefit from positive data and trade dynamics.

• Indian markets face volatility, with short-term treasury yields rising amid concerns over global economic conditions.

• Commodities remain mixed, with metals generally on the rise, while energy and grains show little movement.

Stay tuned for more updates as market conditions evolve.

📌 This commentary is for informational purposes only. Please consult your financial advisor before making investment decisions.