INDIA: Country Wrap: India to Surpass the US in PPP by '38
- India has been hit by a 50 per cent tariff on its exports to the US since August 27, affecting key sectors such as textiles and seafood. Brokerages, however, expect the US to reduce the tariff to 25 per cent in the coming months. “Our base case assumes that the reciprocal tariffs will remain at 25 per cent through FY26, but the 25 per cent penalty will be lifted after November,” Nomura said in its latest report. Despite predicting a breather, Nomura has cut its GDP forecast for FY26 to 6 per cent from 6.2 per cent, citing weaker exports, job losses, and a slowdown in private investments. It also expects two more rate cuts of 25 basis points each by the RBI in October and December. (source Financial Express)
- India will surpass the United States in terms of purchasing power parity (PPP) by 2038 if the two countries continue to grow at the forecasted rates beyond 2030, an EY Economy Watch report said. This means India will go on to become the world’s second-largest economy in purchasing power parity in the next 13 years, with the expected to hit $34.2 trillion. The report added that the average predicted growth rates of India and the US over the period 2028 to 2030 at 6.5% and 2.1% (IMF), respectively. The report, coming on a day when US President Donald Trump’s 50% tariffs on Indian goods kicked in, boosts the country’s confidence, proving that the current scenario will not last for longer. (source Financial Express)
- India's NIFTY 50 is one of the worst regional performers down modestly today, but over -2.4% for the week.
- The Rupee has continued its run of weak performance, down -0.30% for the week at 87.80
- Bonds are ending the week with a sell off, with the IGB 10yr +3bps to 6.56% today and end in line with where it started the week.
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EURGBP TECHS: Monitoring A Bearish Engulfing Candle
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
- RES 1: 0.8705/69 50% of Jul 28-29 sell-off / High Jul 27 & bull trigger
- PRICE: 0.8656 @ 06:31 BST Jul 30
- SUP 1: 0.8649/42 20- day EMA/Low Jul 29
- SUP 2: 0.8584 50-day EMA
- SUP 3: 0.8540 Low Jun 30
- SUP 4: 0.8508 Low Jun 27
The trend set-up in EURGBP remains bullish, however, Monday’s price pattern - a bearish engulfing candle - does signal a potential short-term reversal. Support at the 20-day EMA, at 0.8649 was pierced on Tuesday, a clear break of this average would signal scope for a deeper retracement. The 50-day EMA lies at 0.8584. For bulls, a move through 0.8769, the Jul 27 high, would confirm a resumption of the uptrend.
FRANCE DATA: Q2 Flash GDP Skewed Higher By Inventories
French Q2 flash GDP was slightly stronger than expected at 0.3% Q/Q (vs 0.1% cons and prior). However, the details of the print are not strong: Inventory investment contributed 0.5pp to the quarterly print (vs 0.7pp prior), with final domestic demand dragging 0.1pp and net exports pulling GDP down by 0.2pp.
SCHATZ TECHS: (U5) Trading Above Last Week’s Low
- RES 4: 107.360 High Jul 22 and a key resistance
- RES 3: 107.267 50-day EMA
- RES 2: 107.233 20-day EMA
- RES 1: 107.155 Low Jul 28
- PRICE: 107.100 @ 05:58 BST Jul 30
- SUP 1: 107.010 Low Jul 25 and a bear trigger
- SUP 2: 107.993 1.500 proj of the Jul 7 - 11 - 22 price swing
- SUP 3: 106.964 1.618 proj of the Jul 7 - 11 - 22 price swing
- SUP 4: 106.928 1.764 proj of the Jul 7 - 11 - 22 price swing
Schatz futures traded sharply lower last week resulting in a break of key short-term support at 107.120, the Jul 11 low and a bear trigger. However, the contract has recovered from the Jul 25 low and recent price patterns highlight a potential base. A continuation higher would expose resistance at the 20-day EMA, at 107.221. The 50-day EMA is at 107.267. On the downside, key support and the bear trigger has been defined at 107.010, the Jul 25 low.
