On the domestic front, USD/INR continued to trade in a range-bound manner. Though moderation in crude oil prices could provide some support, broader dollar strength could cap any strong gains in the pair. We expect continued intervention from the RBI to limit extreme volatility in the pair. In the near term, we expect the pair to trade in the 95.50–96.20 range.

US data: GDP growth for Q2CY26 was revised up sharply to 2.2% annualized in the third estimate, from 1.5% previously. The 70-bps upward revision primarily reflected stronger investment, consumer spending and government spending. Similarly, US consumer spending rose sharply in August, with nominal personal consumption expenditures up 0.9% m-o-m after a downwardly revised 0.1% gain in July.

Crude oil: Brent crude oil was trading lower at USD 97.36 pb on reports that crude oil flows from the Middle East were nearing pre-war levels.

EUR/USD is trading below the 1.132 level, tracking broader dollar strength. On the data front, Germany CPI inflation released yesterday surprised on the upside at 3.3% in September vs market expectation of 3.0%. In the near-term, we expect the pair to trade in the range of 1.13-1.14.

USD/JPY is trading above 158 level at the time of writing. The pair is likely to trade in a narrow range of 157-159 in the near-term as intervention risk from the BoJ remains high. Japan’s Finance Minister has repeatedly reaffirmed that the country is working closely with the US to ensure stability in the FX market, reinforcing views that BoJ/Ministry of Finance is ready to intervene as and when needed.

USD/INR appreciated by 0.2% yesterday to close at 95.83 on likely intervention by the RBI. In the near-term, we expect the pair to trade in the range of 95.50-96.20.

India 10Y yield closed ~2-bps higher at 7.187% yesterday. In the near-term, we expect India 10Y yield to trade in the range of 7.10-7.20%.

System Liquidity: The liquidity balance stood at a surplus of INR 4.66 lakh Cr as on 29^thSeptember. RBI’s FX intervention remains as a major drag on liquidity even though month end government spending could provide support. Yesterday, RBI conducted overnight VRRR auction for INR 2.0 lakh Cr, of which INR 85,424 Cr got subscribed. Today, RBI will conduct 4-day VRRR auction for INR 2.0 lakh Cr.