- USD/INR struggles for clear directions after five-week uptrend, grinds higher of late.
- Hawkish Fed concerns, upbeat US Treasury bond yields underpin US Dollar strength.
- RBI’s hawkish mood contrasts with fears of easy growth figures to weigh on Indian Rupee.
- US data, risk catalysts eyed for clear directions past India Q3 GDP.
USD/INR seesaws around 82.90 as bulls take a breather following a five-week winning streak during early Monday. In doing so, the Indian Rupee (INR) pair portrays the traders’ anxiety ahead of the key third quarter (Q3) Indian Gross Domestic Product (GDP) for the Fiscal Year 2023 (FY2023).
Despite the pre-data anxiety, the hopes of softer FY2023 Q3 GDP figures, 4.6% versus 6.3% prior, join the hawkish Federal Reserve (Fed) concerns to keep USD/INR buyers hopeful. That said, the Reserve Bank of India’s (RBI) readiness to tame inflation, even at the cost of higher rates, seems to challenge the Indian Rupee bears.
Even so, the strong US inflation clues join geopolitical fears surrounding China and Russia, as well as hawkish Fed concerns, to keep the USD/INR buyers hopeful. That said, the US Dollar Index (DXY) makes rounds to its intraday high of around 105.30 following the initial pullback from a seven-week high. In doing so, the greenback’s gauge versus the six major currencies remains firmer for the fifth consecutive day.
It’s worth observing that market bets for the Fed fund futures hint at the 5.30% interest rate for late 2023, versus the US central bank’s forecast of a near 5.10% peak rate.
Against this backdrop, the US 10-year Treasury yields reverse the early-day losses of around 3.95%. Further, the two-year counterparts jump back towards the highest levels since November 2022, marked the previous day, as bond bears poke the 4.83% level by the press time. Further, the S&P 500 Futures lick its wounds with mild gains after the Wall Street benchmark posted the biggest weekly slump of 2023.
Looking forward, a light calendar on Monday, apart from the US Durable Goods Order for January, will join the pre-data anxiety to restrict USD/INR moves.
Technical analysis
A three-week-old rising wedge chart formation suggests a short-term upward grind of the USD/INR prices between 83.25 and 82.65.
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