The Indian Rupee (INR) is trading weaker on Wednesday, pressured by rising US Treasury bond yields and continued foreign outflows from domestic stocks. Despite this, a decline in crude oil prices may offer some support to the INR, as India is the world’s third-largest oil consumer. Additionally, the Reserve Bank of India (RBI) has been actively intervening to stabilize the currency, potentially limiting further depreciation.
Traders are closely monitoring upcoming US economic indicators, including the October ADP Employment Change, advanced Q3 Gross Domestic Product (GDP), and September Pending Home Sales, all set to be released later today. Notably, the Indian market will be closed on Friday in observance of Diwali.
In October alone, foreign investors have pulled out $10 billion from India’s equity and debt markets, marking the highest level of selling this year. The RBI forecasts a growth rate of 7.2% for the Indian economy in FY25, with quarterly projections of 7.0% for Q2, 7.4% for Q3, and 7.4% for Q4. However, Nomura has expressed skepticism, suggesting that the RBI’s optimistic growth estimate may not reflect the current economic climate, which they describe as a “cyclical growth slowdown.”
Recent data from the US Bureau of Labor Statistics indicated that job openings fell to 7.44 million in September, down from a revised figure of 7.86 million in August, missing market expectations of 7.99 million. In contrast, the US Conference Board reported a rise in the Consumer Confidence Index to 108.7 in October, up from an upwardly revised 99.2 in September, surpassing expectations of 99.5.
Traders are now pricing in a 98.4% likelihood of a 25 basis point rate cut by the Federal Reserve in its upcoming November meeting, according to the CME FedWatch tool.
From a technical standpoint, the USD/INR pair maintains a bullish outlook, trading above the key 100-day Exponential Moving Average (EMA) on the daily chart. The path of least resistance appears upward, with the 14-day Relative Strength Index (RSI) holding above the midline at approximately 59.20.
Immediate resistance for the pair is observed at the upper boundary of the ascending trend channel at 84.22. If the pair extends its gains, it could reach 84.50 and subsequently test the psychological level of 85.00. Conversely, if the USD/INR remains below the lower limit of the trend channel near 84.05, it may open the door for a decline toward 83.76, aligning with the 100-day EMA.
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