USD/INR drops to fresh monthly low amid upbeat China inflation, softer greenback
|- USD/INR extends the previous day’s downpour to the sub-71.00 region, USD keeps the losses.
- Swaps indicate no more rate cuts from the RBI, fears of trade war keep bulls in check.
- Data from China suggest improvement in price pressure, imports also surged during the weekend.
USD/INR declines to 70.9150 amid the initial Indian trading session on Tuesday. The pair recently benefited from upbeat China data and calls of no more rate cuts from the Reserve Bank of India (RBI).
With the Asian leader China registering upbeat inflation data, markets in the region seem to benefit. However, fears of the trade war between the United States (US) and China keep the optimists under check.
Also supporting the move is the latest surge in one-year interest-rate swaps. The interest rate swap surged 27 basis points to a four-month high of 5.29% on Dec. 6 while also pricing out 25-40 basis points of a rate cut before the latest decision.
Further, the US Dollar (USD) also witnesses downside pressure since the week start as traders stay cautious for the US-China trade deal ahead of the key US tariff deadline on December 15. Additionally, the last monetary policy meeting by the US Federal Reserve (Fed) and the European Central Bank (ECB), coupled with the election in the United Kingdom (UK) also pushes traders towards being cautious.
Reflecting the moves, long-dated Treasury yields of the US bonds stay mostly sluggish while that of Japan recover. Further, markets in Asia followed Wall Street that flashed losses the previous day.
Technical Analysis
As far as the prices stay below 71.20/15 area including 100-day Simple Moving Average (SMA) and the four-month-old rising trend line, chances of witnessing November lows near 70.50 can’t be ruled out.
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