USD/INR trades with mild losses, eyes on US CPI data


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  • The
    Indian
    Rupee
    edges
    higher
    in
    Thursday’s
    Asian
    session. 

  • The
    persistent
    Indian
    foreign
    inflows
    and
    a
    fall
    in
    crude
    oil
    prices
    support
    the
    INR. 

  • The
    US
    June
    Consumer
    Price
    Index
    (CPI)
    inflation
    data
    will
    be
    the
    highlight
    on
    Thursday.

The
Indian
Rupee
(INR)
strengthens
on
the
softer
US
Dollar
(USD)
on
Thursday.
Additionally,
the
sustained
inflow
of
foreign
funds
into
Indian
markets
and
the
decline
of
crude
oil
prices
all
contribute
to
the
INR’s
upside.
The
upside
of
the
pair
remains
capped
amid
the
potential
rate
cuts
by
the
US

Federal
Reserve

(Fed),
even
though
Fed
Chair
Jerome
Powell
said
the
labor
market
was
better
balanced
and
acknowledged
progress
on
cooling
inflation
without
committing
to
rate
cuts. 

Nonetheless,
the
renewed
Greenback
demand
from
importers
due
to
high
oil
price
pressures
might
undermine
the
local
currency
as
India
is
the
third
largest
consumer
of
crude
oil
in
the
world,
after
the

United
States

and
China.
Later
on
Thursday,
investors
will
closely
monitor
the
release
of
the
US
Consumer
Price
Index
(CPI)
inflation
data
for
June.
Further
progress
on
inflation
could
lead
to
key
changes
in
their
policy
statement
that
pave
the
way
for
a
September
rate
cut. 

Daily
Digest
Market
Movers:
Indian
Rupee
rebounds
amid
Indian
foreign
inflows
and
lower
crude
oil
prices

  • The
    Indian
    Rupee
    is
    expected
    to
    trade
    with
    a
    slight
    bearish
    bias
    on
    weakness
    in
    the
    domestic
    market
    and
    a
    positive
    tone
    in
    the
    US
    Dollar,
    said
    Anuj
    Choudhary,
    Research
    Analyst
    at
    Sharekhan
    by
    BNP
    Paribas. 
  • The
    Fed
    Chair
    Jerome
    Powell
    responded
    to
    questions
    before
    the
    House
    Financial
    Services
    Committee
    on
    Wednesday,
    saying
    that
    the
    Fed
    will
    make
    interest
    rate
    decisions
    based
    on
    the
    data,
    the
    incoming
    data,
    the
    evolving
    outlook,
    and
    the
    balance
    of
    risks,
    and
    not
    in
    consideration
    of
    political
    factors. 
  • Powell
    further
    stated
    that
    it
    would
    not
    be
    appropriate
    to
    cut
    the
    policy
    rate
    until
    they
    gain
    greater
    confidence
    in
    inflation
    heading
    sustainably
    towards
    the
    Fed’s
    2%
    target. 
  • Fed
    Governor
    Lisa
    Cook
    said
    on
    Thursday
    that
    US
    inflation
    should
    continue
    to
    fall
    without
    a
    significant
    further
    rise
    in
    the
    Unemployment
    Rate,
    per
    Reuters.
  • The
    probability
    of
    the
    Fed
    leaving
    the
    policy
    rate
    unchanged
    in
    September
    stood
    at
    nearly
    25%
    following
    this
    event,
    according
    to
    the
    CME
    FedWatch
    Tool.
  • The
    US
    CPI
    is
    projected
    to
    show
    an
    increase
    of
    3.1%
    YoY
    in
    June,
    while
    core
    inflation
    is
    projected
    to
    remain
    steady
    at
    3.4%
    YoY. 

Technical
analysis:
USD/INR
extends
consolidation
in
the
near
term

The
Indian
Rupee
trades
on
a
positive
note
on
the
day.
The

USD/INR

pair
maintains
its
uptrend
on
the
daily
chart,
with
the
pair
holding
above
the
key
100-day
Exponential
Moving
Average
(EMA). 

In
the
near
term,
further
consolidation
remains
in
play
as
the
pair
has
traded
within
a
familiar
trading
range
since
March
21.
The
neutral
momentum
is
also
supported
by
the
14-day
Relative
Strength
Index
(RSI),
which
hovers
around
the
50-midline.

Sustained
trading
above
the
upper
boundary
of
the
trading
range
at
83.65
will
pave
the
way
to
the
all-time
high
of
83.75.
Further
north,
the
next
hurdle
is
seen
at
the
84.00
psychological
barrier. 

On
the
other
hand,
a
decisive
break
below
the
100-day
EMA
at
83.36
could
draw
in
enough
bearish
demand
to
the
83.00
round
mark.
The
additional
downside
filter
to
watch
is
82.82,
a
low
of
January
12.


US
Dollar
price
today

The
table
below
shows
the
percentage
change
of
US
Dollar
(USD)
against
listed
major
currencies
today.
US
Dollar
was
the
weakest
against
the
Australian
Dollar.

 
USD

EUR

GBP

CAD

AUD

JPY

NZD

CHF

USD
  -0.05% -0.04% -0.01% -0.09% -0.01% -0.07% -0.07%

EUR
0.06%   0.01% 0.04% -0.05% 0.05% -0.01% 0.01%

GBP
0.05% -0.01%   0.05% -0.06% 0.03% -0.02% -0.02%

CAD
0.01% -0.05% -0.05%   -0.09% 0.01% -0.06% -0.04%

AUD
0.09% 0.05% 0.05% 0.09%   0.07% 0.05% 0.05%

JPY
0.01% -0.03% -0.04% 0.00% -0.08%   -0.06% -0.04%

NZD
0.07% 0.01% 0.01% 0.08% -0.04% 0.06%   0.01%

CHF
0.06% -0.02% 0.01% 0.05% -0.05% 0.02% 0.00%  

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).

Indian
Rupee
FAQs

The
Indian
Rupee
(INR)
is
one
of
the
most
sensitive
currencies
to
external
factors.
The
price
of
Crude
Oil
(the
country
is
highly
dependent
on
imported
Oil),
the
value
of
the
US
Dollar

most
trade
is
conducted
in
USD

and
the
level
of
foreign
investment,
are
all
influential.
Direct
intervention
by
the
Reserve
Bank
of
India
(RBI)
in
FX
markets
to
keep
the
exchange
rate
stable,
as
well
as
the
level
of
interest
rates
set
by
the
RBI,
are
further
major
influencing
factors
on
the
Rupee.

The
Reserve
Bank
of
India
(RBI)
actively
intervenes
in
forex
markets
to
maintain
a
stable
exchange
rate,
to
help
facilitate
trade.
In
addition,
the
RBI
tries
to
maintain
the
inflation
rate
at
its
4%
target
by
adjusting
interest
rates.
Higher
interest
rates
usually
strengthen
the
Rupee.
This
is
due
to
the
role
of
the
‘carry
trade’
in
which
investors
borrow
in
countries
with
lower
interest
rates
so
as
to
place
their
money
in
countries’
offering
relatively
higher
interest
rates
and
profit
from
the
difference.

Macroeconomic
factors
that
influence
the
value
of
the
Rupee
include
inflation,
interest
rates,
the
economic
growth
rate
(GDP),
the
balance
of
trade,
and
inflows
from
foreign
investment.
A
higher
growth
rate
can
lead
to
more
overseas
investment,
pushing
up
demand
for
the
Rupee.
A
less
negative
balance
of
trade
will
eventually
lead
to
a
stronger
Rupee.
Higher
interest
rates,
especially
real
rates
(interest
rates
less
inflation)
are
also
positive
for
the
Rupee.
A
risk-on
environment
can
lead
to
greater
inflows
of
Foreign
Direct
and
Indirect
Investment
(FDI
and
FII),
which
also
benefit
the
Rupee.

Higher
inflation,
particularly,
if
it
is
comparatively
higher
than
India’s
peers,
is
generally
negative
for
the
currency
as
it
reflects
devaluation
through
oversupply.
Inflation
also
increases
the
cost
of
exports,
leading
to
more
Rupees
being
sold
to
purchase
foreign
imports,
which
is
Rupee-negative.
At
the
same
time,
higher
inflation
usually
leads
to
the
Reserve
Bank
of
India
(RBI)
raising
interest
rates
and
this
can
be
positive
for
the
Rupee,
due
to
increased
demand
from
international
investors.
The
opposite
effect
is
true
of
lower
inflation.