- USD/INR reverses from weekly top as traders react to RBI Bulletin, rethink over Fed tapering.
- Sluggish markets add to consolidation of previous day’s gains.
- US consumer-centric data may offer intermediate moves ahead of next week’s key FOMC.
USD/INR takes a U-turn from the weekly top, on the bids around 73.45 by the press time of the pre-European session on Friday. In doing so, the Indian rupee (INR) pair not only reverses the previous day’s gains but also drops 0.17% on a day at the latest.
Behind the moves could be the latest reaction over the Reserve Bank of India’s (RBI) Bulletin, published the previous day. “Prospects are brightening for the economy achieving escape velocity from the pandemic as the second wave wanes and preparedness for the future remains on war-alert status,” said RBI per the periodical update.
Also favoring the pair sellers could be the latest pullback of the US Dollar Index (DXY). The greenback gauge grinds higher around 92.85, steady of late, following that biggest daily jump in since mid-August.
The greenback gauge rallied Thursday after the US Retail Sales for August and Philadelphia Fed Manufacturing Index for September renewed Fed tapering concerns. The US Retail Sales MoM jumped to the highest in five months while crossing expectations of -0.8% with +0.7% figures. Further, the Philly Fed gauge also rose strongly to 30.7 versus 19 forecast and 19.4 prior, marking the strongest figures in three months.
Also underpinning the DXY were chatters that the US, the UK and Australia are jointly challenging China with securities pact and the US hosting of the UK, India, Australia and Japan for diplomatic talks the next week. Additionally, the Sino-American tussles, recently over Taiwan, join the hurricanes that challenge oil firms in the US Gulf to add to the risk-off mood and favor the US dollar’s safe-haven demand. As per the latest updates, the US and Australia issue joint statement showing concerns over the South China Sea claims while conveying readiness to strengthen ties with Taiwan.
Of late, a rethink over the Fed’s tapering seems to probe the bears. Reuters’ latest poll of 51 economists pushes back the tapering to the November meeting while citing the inflation concerns. The survey also hints at the Delta covid variant’s downbeat impact on the US Q3 GDP. Additionally, hints that the US stimulus talks are in pipeline and more vaccines are on the way seemed to have underpinned the latest consolidation.
Amid these plays, S&P 500 Futures print mild gains while the US 10-year Treasury yields seesaw near 1.33% by the press time.
Looking forward, a light calendar and mixed clues may weigh on the USD/INR prices ahead of the preliminary readings of the US Michigan Consumer Sentiment Index for September, expected 72.2 versus 70.3 prior.
Read: US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs
Technical analysis
Repeated failures to cross 100-DMA, around 73.80 by the press time, keep USD/INR sellers hopeful to revisit the 73.00 threshold.