USD/INR: India open offers pullback amid trade jitters, RBI in focus
- USD/INR recovers from four-day low amid cautious trade optimism.
- Traders keep eyes on odds of RBI’s another rate cut, growth comments.
USD/INR trades around 71.52 as Indian markets open for Thursday’s trading. That said, the quote registered the heaviest drop since November 01 on Wednesday amid trade pessimism while comments from the US President Donald Trump recently triggered a pullback.
The United States (US) President Donald Trump tried pleasing phase-one deal watchers the other day. However, Chinese diplomats poured cold water on the sentiment off-late.
In addition to the trade jitters, expectations surrounding another rate cut from the Reserve Bank of India (RBI) also favor the pair’s pullback. Even so, investors stay a little cautious ahead of the actual result from the RBI as it has already cut borrowing costs by 135 basis points (bps) so far in 2019.
India’s BSE SENSEX nears 0.20% gains while the S&P/NIFTY 50 follows the suit while flashing 12,060 level. The US 10-year treasury yields stay on the back foot around 1.76% after rising the previous day.
While a multi-year Gross Domestic Product (GDP) low and outlook downgrade from Moody’s are some of the reasons analysts keep expecting easy money policy from the Indian central bank. On the contrary, the recent “no change in outlook” by S&P, coupled with seasonal factors, are arguments of the contrarians.
Other than the rate decision, the central bank’s comments on growth will also have a key impact on USD/INR as markets want to ascertain recently sluggish growth numbers from the Asian economies.
Technical Analysis
Unless breaking a month-old rising trend line around 71.42, sellers are less likely to enter, which in turn keeps the 72.00 mark on the cards.