- USD/INR edges higher after printing the heaviest daily gains in a week.
- US Inflation data couldn’t tame tapering fears, USD tracks firmer yields of late.
- Indian covid numbers rise after hitting the strongest fall since late August.
- Downbeat China data, dull equities favor the pair buyers amid a sluggish session.
USD/INR eases from the intraday top, up for the third consecutive day around 73.70 heading into Wednesday’s European session. In doing so, the Indian rupee (INR) pair aptly portrays the market’s indecision ahead of the next week’s US Federal Reserve (Fed) monetary policy meeting.
That said, the US Consumer Price Index (CPI) for August eased below forecasts but the higher actual numbers, despite the recent weakness, as well as a slew of data left for publishing challenges the market sentiment.
The US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months.
Elsewhere, covid woes and geopolitical tensions also weigh on the market sentiment, underpinning the safe-haven demand of the US Treasury bonds, which in turn weigh on its yields. This in turn favors USD/INR bulls as Asia-Pacific stocks also lend to the bears.
Also weighing on the Indian rupee (INR) is the recently dismal Industrial Production and Retail Sales data from China, not to forget chatters of the default of the nation’s second-biggest real estate firm and economic risks associated with it.
It’s worth noting that India’s daily rise in covid infections grew to 27,176 after the cases dropped the most since late August the previous day with 25,404 numbers. It’s worth noting that the virus-led fatalities in India eased from 339 reported yesterday to 284.
Given the lack of major data/events left for publishing for today, USD/INR traders will keep their eyes on Thursday’s US Retail Sales and Friday’s Michigan Consumer Confidence for fresh impulse. Above all, Fedspeak and chatters relating to the same will be the key.
Technical analysis
Unless crossing the 100-DMA level of 73.82, USD/INR bulls remain unconvinced. However, pullback moves will have to slip back below 73.58, comprising 200-DMA to recall the sellers.
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