- USD/INR takes the bids during the three-day uptrend to multi-day top.
- RBI matches wide market forecasts as Governor Das backs accommodative monetary policy to revive growth.
- US dollar tracks firmer Treasury yields amid cautious sentiment.
- US jobs report, China headlines eyed for fresh impulse.
USD/INR stays well bid during early Friday, up 0.45% intraday around 75.15 heading into Friday’s European session after the Reserve Bank of India’s (RBI) inaction.
The RBI matched wide market expectations while keeping the benchmark Repo Rate and Reverse Repo Rate unchanged at 4.0%, and 3.35% respectively, staying intact for the eighth time.
Following the interest rate decision, the RBI Governor Shaktikanta Das said, “Recovery of Indian economy gaining traction.” The policymaker also mentioned that the Inflation trajectory is better than expected and growth impulses seem to be strengthening.
On the positive side, RBI’s Das said, “With worst of the second wave behind us, pickup in vaccinations, recovery of Indian economy gaining traction.” “MPC (Monetary Policy Committee) noted that economic activity over last 2 months has broadly evolved in consonance with MPC,” added the RBI Boss.
Also favoring the USD/INR bulls is the US dollar strength as optimism ahead of the US Nonfarm Payrolls (NFP) joins renewed financial market fears from China to underpin the US Treasury yields and the greenback’s safe-haven demand.
Against this backdrop, the US Dollar Index (DXY) picks up bids tracking the US 10-year Treasury yields, up 1.8 basis points to 1.59% by the press time. Further, Wall Street marked another positive day by the end of Thursday but the S&P 500 Futures seem to dwindle of late.
Given the sluggish mood and firmer Treasury yields, the USD/INR bulls are likely to keep the reins. However, any disappointment from today’s US jobs report may not hesitate to portray a healthy consolidation of the pair’s latest gains.
Read: US Nonfarm Payrolls September Preview: How far will markets go when the Fed tapers?
Technical analysis
A daily closing below 74.90 becomes necessary for even a short-term pullback of the USD/INR prices. Otherwise, the run-up towards the yearly peak of 75.63 can’t be ruled out.