Indian rupee fluctuates around 82.50, Fed eyeing RBI announcements

  • USD/INR remains slightly bid while paring previous weekly losses.
  • Bad data from China, risk-off sentiment drives prices even as WTI Crude falls.
  • Hopes of RBI inaction join hawkish bets from the Fed to keep buyers hopeful.

USD/INR opens bids to consolidate last week’s losses around 82.40 early Monday in Europe. The Indian rupee (INR) pair shows the market’s rush towards the US dollar ahead of the central bank’s key announcements.

However, the US Dollar Index (DXY) is showing a three-day uptrend around 110.80, up 0.10% on the day to press time, as traders expect the US Federal Reserve (Fed) to make a call on Wednesday Federal Open Market Committee (FOMC) will announce a 75 basis point rate hike.

On the other hand, Reuters said Thursday’s meeting of the Reserve Bank of India’s monetary policy committee would most likely discuss the central bank’s response to the government after it failed to meet its inflation target for three consecutive quarters. “The State Bank of India does not expect a different agenda for this meeting, although it is scheduled a day after the Fed meeting,” the message adds.

Elsewhere, the gloomy Chinese activity numbers and Russia-backed fears are also weighing on market sentiment and driving USD/INR rates. China’s official NBS manufacturing purchasing managers’ index for October fell to 49.2 from 50.0 expected and 50.1 before. In addition, the non-manufacturing PMI also fell to 48.7 compared to 51.9 market forecasts and 50.6 previous readings. “China’s factory activities unexpectedly fell in October, an official survey showed on Monday, weighed down by slowing global demand and tough COVID-19 restrictions that impacted production,” Reuters said after the data.

Additionally, news of a casino resort lockdown in Macau and fears originating in Russia underpin USD/INR bullishness on the US dollar’s safe haven status. “Russia, which invaded Ukraine on February 24, suspended its role in the Black Sea Agreement ‘indefinitely’ on Saturday because it could say it could, after an attack on ‘the safety of civilian ships’ operating under the pact drive, not ‘guarantee’ its Black Sea Fleet,” Reuters reported.

It should be noted that recent weakness in WTI crude oil prices, which are down 1.0% in one day at $87.40 at press time, fails to anger USD/INR bears. However, 10-year US Treasury yields lurched nearly 4.00% after breaking the 10-week uptrend through late Friday, while US stock futures posted modest losses even after the Dow Jones settled for its largest monthly jump had been preparing since 1976.

Going forward, market risk catalysts and second tier US PMI data may keep USD/INR pair traders entertained, but the bulls are likely to remain in control.

Technical Analysis

A daily close beyond the 10-DMA, around 82.50 at press time, will be needed for the USD/INR bulls.

source

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