- USD/INR keeps pullback from the highest levels since August 27.
- Upbeat market sentiment, mainly due to China headlines, favors Asian currencies.
- ADB’s cautious optimism, US debt limit chatters are extra catalysts to watch.
- Fed tapering becomes the key concern for markets, geopolitics, covid headlines are important too.
USD/INR remains pressured around intraday low after stepping back from the monthly peak during early Wednesday. That said, the Indian rupee (INR) pair takes clues from the risk-on mood in Asia while paying a little heed to the firmer US Dollar Index (DXY) and the pre-Fed caution, not to forget slightly covid infections in India.
Risk appetite improves as the People’s Bank of China’s (PBOC) safeguards money flow against struggled real-estate major Evergrande with a heavy liquidity injection, of around 110 billion yuan. Also, the firm’s announcement to pay coupons on the expiry date of September 23, previously doubted, add to the risk-on mood.
Further, the International Monetary Fund’s (IMF) Chief Economist Gita Gopinath sounded optimistic over China’s ability to tame the fears emanating from the real-estate firm. On the same line were hopes of the extension to the US debt limit expiry the House votes 217-207 to favor temporary government funding and debt limit increase debate.
However, the Asian Development Bank (ADB) said, “Developing Asia's economic rebound this year could be dented by the rapid spread of the Delta coronavirus variant,” per Reuters while challenging the optimists. On the same line were headlines from Bloomberg suggesting the European Union (EU) and the US aim to pledge more enforcement to curb China's risk. Additionally, an increase in India’s virus-led daily deaths and COVID-19 infections, recently by 383 and 26,964 versus 252 and 26,115 reported yesterday, test USD/INR bears.
While portraying the mood, S&P 500 Futures snap a four-day downtrend to print 0.15% intraday gains by the press time while the US 10-year Treasury yields fade initial strength around 1.32%. However, the US Dollar Index (DXY) picks up bids to 93.258, up 0.08% intraday by the press time.
Looking forward, the Federal Open Market Committee (FOMC) monetary policy meeting announcement will be important to watch as markets do expect tapering hints but Chairman Jerome Powell isn’t famous for his bullish outlook.
Technical analysis
Although a three-week-old support line and 200-DMA challenges the USD/INR bears, respectively around 73.55 and 73.60, the pair buyers need to provide a daily closing beyond a downward sloping resistance line from late July and 50-DMA, around 74.00, to keep the reins.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.