- USD/INR is facing barricades in an attempt of overstepping the immediate hurdle of 82.00.
- A significant jump in demand for US Durable Goods could lift interest rate guidance.
- A decline in India’s retail inflation might force the RBI to a lower rate hike.
The USD/INR pair is displaying topsy-turvy moves in the Asian session after a juggernaut rally in the past few trading sessions. The asset is oscillating in a narrow range of 81.60-81.90 as anxiety among investors is escalating ahead of the release of the US Durable Goods Orders data.
Market mood is delivering mixed responses amid the unavailability of any potential trigger that could guide investors for a decisive move. Meanwhile, the US dollar index (DXY) is struggling to move above the immediate hurdle of 107.60. Also, the US Treasury yields have lost their reins led by weak odds for a bigger rate hike announcement by the Federal Reserve (Fed) in its December monetary policy meeting.
The 10-year US Treasury yields are hovering around 3.82% as chances for 75 basis points (bps) rate hike by the Fed have dropped below 20%, as per the CME FedWatch tool.
As per the preliminary estimates, the US Durable Goods Orders are likely to improve by 0.4%, similar to their prior release. An improvement in demand for durable goods could add to distress for Fed chair Jerome Powell. The US central bank is continuously giving its blood and sweat to slow down consumer spending as it will force companies to trim their prices for ultimate products. An increment in durable goods demand could force the fed to continue its policy-tightening measures.
On the Indian rupee front, a decline in inflation for October month is easing interest rate projections for the December monetary policy by the Reserve Bank of India (RBI). The inflation rate has eased to 6.77% after printing a high of 7.41% led by a slowdown in a price rise for food items. As per the estimates, the RBI will hike its repo rate by 35 bps to 6.25%.