- USD/INR respected broad risk reset while stepping back from a three-week high.
- US President Trump signals deal with India, savings rate at home drops to a 15-year low.
- China’s coronavirus cases show a mixed reaction, rating giants keep flashing red signals.
- An absence of data at home will keep external catalysts in focus.
USD/INR declines to 71.52 as the Indian markets open for trading on Wednesday. The pair’s latest surge to 71.83 repeated the habit of being short-lived amid risk reset in Asia. However, broad challenges to the Indian economy remain standby.
With the World Health Organization’s (WHO) urge to keep calm over China’s coronavirus death toll, which crossed 2,000 mark as of February 20, joined optimism spread by Chinese President Xi Jinping. The diplomat ruled out Moody’s downbeat growth forecast while expecting the GDP growth to meet the mark in 2020 despite coronavirus threats.
Also on the positive side could be US President Donald Trump’s comments saying, “We will have a really big trade deal with India, maybe after November US election.”
Even so, Moody’s raises doubts on the Asian credit conditions while also downgrading Indian growth forecasts to 5.4% versus 6.6% prior. Furthermore, data from the Central Statistical Organisation shows that the Indian gross savings slump 30.1%, the lowest since 2003/04.
While portraying the market sentiment, the US 10-year treasury yields stay mildly positive to 1.566% with the risk recovery in Asia. It’s worth mentioning that risk reversals suggest the options market is most bullish on the USD/INR pair in over four months.
Given the absence of major data/events at home, traders will keep eyes on the headlines from China as well as the US statistics for near-term direction.
Technical Analysis
A gradual higher high formation poses a serious challenge to 72.00 round-figure. Though 72.2 and January month high near 72.60 stay as a tough nut to crack for the buyers. On the downside, a five-week-old rising trend line near 71.25 acts as the key support.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.