- USD/INR pares intraday gains around six-week high, stays depressed of late.
- US Dollar remains depressed on softer US PMIs, ignore hawkish Fedspeak.
- Market players expect continuous grind between 82.70 and 83.00.
- RBI Minutes, US Core PCE Price Index in focus.
USD/INR remains pressured around 82.70, keeping the previous day’s pullback from a one-month high during early Monday. In doing so, the USD/INR appears mostly directionless, despite printing mild losses, as traders seem cautious ahead of Wednesday’s monetary policy meeting Minutes of the Reserve Bank of India (RBI).
That said, the US Dollar weakness appears the key catalyst behind the Indian Rupee (INR) pair’s latest losses, as it snaps a two-day uptrend amid a sluggish start to the week. That said, the US Dollar Index (DXY) prints the first daily loss in three, down 0.20% intraday near 104.55, amid cautious optimism in the market. In doing so, the DXY struggles to justify the recently hawkish comments from Federal Reserve Bank of Cleveland President Loretta Mester and New York Federal Reserve President John Williams. The reason could be linked to Friday’s downbeat prints of the preliminary US PMIs for December, as well as the Fed’s 0.50% rate hike.
It’s worth noting that trading sentiment in India appears sour as Reuters mentioned, “The Indian rupee is expected to weaken marginally this week, with the focus on US economic data and broad moves in the dollar, while government bond yields could see an upside given the caution that has set in recently.”
Elsewhere, talks surrounding the Bank of Japan’s (BOJ) end of ultra-loose monetary policy and China’s readiness for heavy stimulus, amid mixed concerns over the Covid conditions, challenge the market’s moves amid a lack of major data/events.
Looking forward, USD/INR traders should pay attention to Wednesday’s RBI Meeting Minutes for clear directions. “The RBI raised the repo rate by 35 basis points to 6.25% at that meeting, in which Governor Shaktikanta Das highlighted inflation concerns,” mentioned Reuters. The pair buyers may want to confirm the inflationary fears in this week’s RBI Minutes.
On the other hand, the Fed’s preferred inflation gauge, namely Friday’s US Core Personal Consumption Expenditures (PCE) - Price Index for November, expected 4.6% YoY versus 5.0% prior, will be crucial for the USD/INR pair traders.
Technical analysis
An eight-day-old ascending trend channel defends USD/INR bulls between 82.60 and 83.15.
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