- USD/INR is expected to stretch its valuations after overstepping the weekly high at around 79.80.
- A one-time drop in US inflation won’t be sufficient to trim Fed's hawkish stance.
- Oil prices have failed to recapture the $90.00 territory.
The USD/INR pair is displaying wild moves in the opening session after a holiday of Muharram as investors are paring their stretched positions. The asset has remained bullish in the entire month and is expected to extend gains after overstepping the weekly high at around 79.80.
In today’s session, investors’ entire focus will remain on the US Consumer Price Index (CPI). The plain-vanilla US inflation is expected to trim to 8.7% from the prior release of 9.1%. Well, the Federal Reserve (Fed) policymakers are doing the laborious job of containing price pressures by deploying policy tightening measures for the past six months. Signs of exhaustion are in front of us, thanks to the weaker oil prices in June.
However, the case is temporary as a promise of higher supply by the oil cartel won’t sustain due to the unavailability of additional production capacity. Also, a one-time slowdown signal is not sufficient to compel Fed chair Jerome Powell to sound less hawkish. In addition to that, higher job addition in the US labor force in July has refreshed signs of soaring price pressures in the US economy.
On the Indian rupee front, the return of Foreign Portfolio Investors (FPIs) on Dalal Street is likely to support the Indian rupee bulls. Meanwhile, oil prices have failed to sustain above the psychological resistance of $90.00. This may bring offers again to the table and the Indian economy, being a major oil consumer will be delighted with the declining oil prices.
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