USD/INR loses traction ahead of US NFP data – Crypto News – Crypto News
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USD/INR edges lower ahead of Indian CPI data USD/INR edges lower ahead of Indian CPI data

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USD/INR loses traction ahead of US NFP data – Crypto News

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12 months ago

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  • Indian Rupee drifts higher on Friday amid the softer Greenback. 
  • The positive outlook in the Indian economy and capital inflows support the INR. 
  • Investors await the US ISM Services PMI and the employment data on Friday. 

Indian Rupee (INR) gains momentum on Friday as the cautious comments by the Federal Reserve (Fed) Chair Jerome Powell exert further selling pressure on the US Dollar (USD). Furthermore, the positive sentiment in the Indian equity markets and the inflow of foreign capital boost the INR and cap the pair’s upside. 

Market players will keep an eye on the US ISM Services PMI and the employment data for April, due on Friday. The Nonfarm Payrolls (NFP)  is estimated to show 243K job additions in the US economy, while the Unemployment Rate is projected to remain steady at 3.8% in April. The unexpected weakening in the labor market could warrant a rate cut from the Fed, which weighs on the Greenback. 

Daily Digest Market Movers: Indian Rupee remains strong amid the positive sentiment 

  • The HSBC final India Manufacturing Purchasing Managers’ Index (PMI) declined to 58.8 in April from a 16-year high of 59.1 in March.
  • FX intervention from the RBI in February was the lowest in six months, about one-eighth of the average monthly intervention from October to December, per Reuters. 
  • QuantEco Research economist, Vivek Kumar, said that pressures on the Indian Rupee eased in the January-March compared to October-December, reducing the magnitude of intervention. 
  • The Organisation for Economic Co-operation and Development (OECD) raised its growth forecast for India by 40 basis points (bps) to 6.6% for 2024-25. 
  • The Initial Jobless Claims in the US for the week ended April 27 remained unchanged at 208K, better than the expectation of 212K. 
  • The US Fed left interest rates unchanged on Wednesday and noted that it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are easing sustainably to its 2% target. 

Technical analysis: USD/INR keeps the bullish stance in the longer term

The Indian Rupee trades weaker on the day. The constructive stance of USD/INR remains unchanged on the daily timeframe as the pair is forming an ascending triangle and holds above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) holds in the bullish territory around the 50 midline, indicating that further consolidation looks favorable for the time being. 

The confluence of the lower limit of the ascending triangle and the 100-day EMA at 83.15 act as an initial support level for USD/INR. A decisive break below this level will expose a low of January 15 at 82.78 and then pave the way to a low of March 11 at 82.65. On the upside, a high of May 1 at  83.50 will be the first upside target for the pair. A bullish breakout above the upper boundary of the ascending triangle of 83.71 will see a rally to the 84.00 psychological round mark. 

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.06% -0.32% 0.04% -0.79% -1.74% -0.19% -0.34%
EUR 0.06%   -0.27% 0.10% -0.73% -1.67% -0.13% -0.27%
GBP 0.32% 0.26%   0.38% -0.48% -1.40% 0.11% -0.03%
CAD -0.05% -0.10% -0.40%   -0.85% -1.78% -0.26% -0.38%
AUD 0.80% 0.75% 0.49% 0.87%   -0.91% 0.61% 0.48%
JPY 1.70% 1.66% 1.37% 1.75% 0.91%   1.50% 1.37%
NZD 0.20% 0.15% -0.10% 0.26% -0.58% -1.51%   -0.11%
CHF 0.34% 0.28% 0.02% 0.39% -0.45% -1.39% 0.15%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

RBI FAQs

The role of the Reserve Bank of India (RBI), in its own words, is ‘..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

 

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