RBI to anchor INR if sounds a bit more hawkish and point to upside risks to inflation – Commerzbank

FXStreet Insights Team FXStreet

USD/INR is still holding within the 81-83 trading range since the start of the year. Economists at Commerzbank analyze Rupee outlook after Indian inflation figures.

RBI may be forced to resume rate hikes if core inflation starts increases sustainably beyond 6%

The good news is that core inflation, excluding food and energy, dipped to 5.3% YoY in April. We could see an uptick in May but as long as it stays near or below 6% in the coming months, it could keep RBI on the sidelines. However, if core inflation starts to show a sustain increase beyond 6%, RBI may be forced to resume rate hikes.

RBI is expected to leave rates unchanged at 6.50% this Thursday, but it could sound a bit more hawkish and point to the upside risks to inflation. This could help to anchor INR.

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD edges lower below 1.1650 as Middle East tensions fuel US Dollar strength

The EUR/USD pair trades in negative territory around 1.1635 during the early Asian session on Thursday. The US Dollar strengthens against the Euro as escalating Middle East conflict boosts safe-haven flows. Traders brace for the Eurozone Retail Sales and US weekly Initial Jobless Claims reports, which will be released later on Thursday.

GBP/USD tests key moving averages as growth downgrade weighs

GBP/USD was nearly flat on Wednesday, edging up 0.08% to settle around 1.3370 in a quiet session. The pair has fallen sharply from its late-January high near 1.3870 and is now testing the 200-day Exponential Moving Average, with this week's one-week forex heatmap showing Pound Sterling as one of the worst performers against the US Dollar, down about 1.4% on the week.