- USD/INR braces for three-week fall, grinds lower of late.
- Shaktikanta Das get another term as RBI Governor, India’s covid-led fatalities jumped to three-month high.
- USD licks US GDP and ECB-led wounds around monthly low.
- US Core PCE Inflation, risk catalysts eyed for fresh impulse.
USD/INR bears take a breather following the heaviest daily fall in a week, seesaws around 74.80 heading into Friday’s European session. Even so, the Indian rupee (INR) pair remains on the way to print a three-week downtrend despite mixed news at home.
Among the positives is Shaktikanta Das’s re-appointment as the Governor of the Reserve Bank of India (RBI) for three years beyond December 10. “Das was previously the department of economic affairs secretary at the finance ministry and was appointed as the head of the central bank on Dec. 11, 2018, for three years,” said Reuters.
On the contrary, the highest covid-led death toll since late July, around 805, pours cold water on the face of the Indian government’s claims of success in jabbing.
Elsewhere, a delay in the US stimulus and mixed concerns over China’s Evergrande also weighed on the market sentiment and allowed the US Dollar Index (DXY) to consolidate recent losses. As per the latest update, US House Speaker Nancy Pelosi conveyed her optimism towards the passage of infrastructure and social spending, climate bills during the phone call to postpone the vote on the infrastructure bill. Further, Global rating giant S&P cites the risk of a default by the 33% of China’s property developers, including Evergrande. The news contrasts Evergrande’s second coupon payment, that too before time.
It should be noted that a softer-than-expected and previous readout of the US Q3 GDP joined the European Central Bank’s (ECB) failures to hide hawkish intentions to weigh on the greenback the previous day.
Against this backdrop, Asian stocks track US stock futures to the south and the US 10-year Treasury yields help the DXY to lick its wounds.
Moving on, the Core Personal Consumption Expenditures (PCE) – Price Index for September, likely to ease to 0.2% from 0.3% prior on the MoM basis will be the key to watch as it’s the Fed’s preferred inflation gauge. Hence, any softening of the data may add challenges for the greenback bulls.
Read: Personal Consumption Expenditure Price Index September Preview: Transitory inflation becomes permanent
Technical analysis
Given the first daily close below 20-DMA, around 75.00 by the press time, since mid-September, coupled with bearish MACD signals, USD/INR is likely declining towards October 21 swing low near 74.70. However, any further downside will be questioned by multiple tops marked in August around 74.50.
