USD/INR renews three-week tops at 71.30 after Moody’s cuts India’s outlook
- Moody’s India outlook downgrade, RBI Dec rate cut bets drown Rupee.
- US-China trade uncertainty also adds to the weight on the INR.
- Focus remains on trade-related developments and US data.
The USD/INR pair witnessed a 30-pips bullish opening gap on Friday and went to refresh three-week highs at 71.30 at the open after the Indian Rupee was heavily hit by Moody’s Investor Service downgrade of India’s outlook to ‘Negative’ from ‘Stable’.
Moody's lowers India's outlook to 'negative' from 'stable'
The US-based ratings agency cited increasing risks to growth in Asia's third-largest economy, in the face of the government’s and policy ineffectiveness in addressing economic weakness, as the main factor for the downward revision.
The bullish bias in the cross is also on account of the broad-based US dollar weakness, fueled by the 8bps rise in the US Treasury yields amid the recent US-China trade optimism. A US official confirmed on Thursday about the plan to roll back the tariff on China.
Moreover, increased odds of a rate cut by the Reserve Bank of India (RBI) next month also collaborates to downbeat sentiment around the Rupee. Market pricing 68% chance of an RBI rate cut on Dec 5
The cross is likely to remain buoyed in the session ahead amid Indian economic growth concerns. However, the prices could see some retracement should the dollar lose its shine across the board on the resurgence of uncertainty over the US-China trade deal, especially after the comments from the White House Adviser Navarro.
USD/INR Technical levels to consider
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
