- The Indian Rupee holds firm in early Monday's European session.
- However, a stronger USD, foreign outflows, and rising crude oil prices could weigh on the INR.
- Traders are closely monitoring the upcoming Fedspeak later on Monday.
The Indian Rupee (INR) regained some ground on Monday, though its outlook remains under pressure due to a stronger US Dollar (USD), increased fund outflows from local equities, and rising crude oil prices.
Traders will be closely monitoring Fedspeak later today for potential shifts in market sentiment. Any dovish remarks from US Federal Reserve (Fed) officials could weaken the USD and lend support to the INR. The Reserve Bank of India (RBI) is set to announce its interest rate decision on Wednesday, with no rate cuts expected as inflation remains elevated.
Daily Digest Market Movers: Indian Rupee recovery, limited upside potential
- The HSBC India Services Purchasing Managers Index (PMI) fell to a 10-month low of 57.7 in September, down from 60.9 in August, missing market expectations of 58.9.
- Despite the decline, "the headline business activity index remained well above the long-term average," according to Pranjul Bhandari, HSBC's chief India economist.
- Meanwhile, the US Nonfarm Payrolls (NFP) report showed an increase of 254,000 jobs in September, surpassing the consensus of 140,000, and the unemployment rate edged down to 4.1%. Additionally, Average Hourly Earnings rose to 3.8% from 3.6%.
- The US Nonfarm Payrolls (NFP) increased by 254,000 in September, up from a revised 159,000 in August and surpassing the market expectation of 140,000, according to the Bureau of Labor Statistics.
- The Unemployment Rate dipped to 4.1% in September from 4.2% in August, while Average Hourly Earnings grew to 3.8%, up from 3.6% over the same period.
- Chicago Fed President Austan Goolsbee described the employment data as "superb" and noted that more reports like this would reinforce his confidence that the US economy is nearing full employment with low inflation.
Technical Analysis: USD/INR remains bullish in the longer term
The Indian Rupee strengthened slightly on the day, but the USD/INR pair maintains a positive long-term outlook, trading above the key 100-day Exponential Moving Average (EMA).
The 14-day Relative Strength Index (RSI) sits at 59.80, supporting the upward momentum. Sustained trading above the key resistance level of 84.00 could attract buyers and push USD/INR toward the all-time high of 84.15, with the next target at 84.50.
Conversely, a break below 83.80, the October 1 low, could push the pair down to the 100-day EMA at 83.65, with further downside potential toward 83.00, representing the May 24 low.
