Weekahead: GDP data key for FX/debt market

Economic growth data for the April-June quarter on August 31 will be the key event for Indian bond and FX markets.

The data is considered critical ahead of the RBI's mid-September policy meeting, as a sharp slowdown in growth could increase pressure on the central bank to overcome its reluctance to cut interest rates.

A slew of economists have cut their forecasts for India's growth in the fiscal year ending in March 2013, with Citigroup and CLSA expecting expansion of only 5.4% and 5.5%, respectively, the lowest in nearly a decade.

Traders also eyeing fiscal deficit data as of July out on August 31. The deficit had hit Rs 1.9 trillion  as of June, or already 37.1% of the government's target for the full fiscal year.

India 10-year bond yield likely to trade in 8.18-8.25% band in the run-up to GDP data, traders say.

USD-INR likely to trade in a 55-56 range, with good demand seen from oil importers in the last week of the month, although global risk factors will also be key.