The Indian Rupee (INR) regained some of its recent losses on Friday, bouncing back from its record closing low hit in the previous session. Market participants remain cautious, anticipating potential interventions by the Reserve Bank of India (RBI) through USD sales, which have so far prevented the INR from depreciating below the critical 84 level. Despite this, ongoing demand for the US Dollar (USD) from oil importers and foreign portfolios may continue to exert pressure on the local currency.
Investors are keeping a close eye on the US employment data to be released later on Friday, including Nonfarm Payrolls (NFP), the Unemployment Rate, and Average Hourly Earnings. Any indications of further weakness in the labor market could raise expectations for a deeper rate cut by the Federal Reserve (Fed), potentially leading to a decline in the Greenback and making other currencies like the INR more attractive.
In market updates, Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted, “The Rupee hit a new all-time low of Rs 83.99 per dollar as importers, foreign portfolio investors (FPIs), and oil companies continued purchasing USD, while the RBI intervened to prevent the INR from crossing the psychological Rs 84.00 per dollar mark.”
Recent data includes a report from Automatic Data Processing (ADP) showing private sector employment increased by 99,000 in August, with annual pay rising by 4.8%. This follows a revised increase of 111,000 in July and falls significantly short of the 145,000 estimate. Additionally, weekly US Initial Jobless Claims rose to 227,000, slightly above the previous reading and below the initial consensus of 230,000. Meanwhile, the US ISM Services PMI edged up to 51.5 in August, surpassing the forecast of 51.1.
Chicago Fed President Austan Goolsbee stated on Friday that the long-term trends in labor market and inflation data justify a potential easing of interest rates by the Fed, with a gradual approach over the coming year.
Technical Analysis: The USD/INR pair continues to trade within an ascending triangle pattern on the daily chart. The pair remains bullish in the long term, holding above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) stands at a bullish 59.55, supporting short-term buying interest.
A sustained move above the 84.00-84.05 zone, which includes the psychological level, the triangle’s upper boundary, and the high of September 4, could lead to an upside breakout towards 84.50. Conversely, any follow-through selling could push the pair down to the ascending triangle support at approximately 83.90. A break below this level might bring the price closer to the 100-day EMA at 83.64.
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