S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- The Indian Rupee steadies in Tuesday’s Asian session.
- A weaker US Dollar and stronger Chinese Yuan could support the INR, but RBI rate cut bets might cap its upside.
- The US Conference Board’s Consumer Confidence report is due later on Tuesday.
The Indian Rupee (INR) flat lines on Tuesday after hitting a two-week high in the previous session. A broader gain in the Asian currencies on account of a weak US Dollar (USD) could provide some support to the Indian currency. Additionally, a decline in crude oil prices might contribute to the INR’s upside. It’s worth noting that India is the world’s third-largest oil consumer, and lower crude oil prices tend to have a positive impact on the INR value.
Nonetheless, expectations of lower interest rates by the Reserve Bank of India (RBI) might weigh on the local currency. Traders brace for the US Conference Board’s Consumer Confidence report, which is due later on Tuesday. Also, Durable Goods Orders and the Dallas Fed Manufacturing Index will be released. The Minutes of the Federal Open Market Committee (FOMC) will be the highlight later on Wednesday.
Indian Rupee trades flat amid weakening of the US Dollar
- “It’s a very EM positive environment, and I don’t see any reason why that will stop in the near term,” said Brad Bechtel, global head of foreign exchange at Jefferies. Bechtel emphasized that the US Dollar (USD) could face steeper losses if China allows the Yuan to start moving substantially higher.
- The Monetary Policy Committee (MPC) of the RBI is likely to cut the repo rate by 25 basis points (bps) at the June meeting, according to Moneycontrol’s poll of economists and bank treasury heads.
- NITI Aayog Chief Executive Officer (CEO) BVR Subrahmanyam said that India has surpassed Japan to become the world’s fourth-largest economy, citing data from the International Monetary Fund (IMF).
- According to the CME FedWatch tool, the chances of an interest rate cut by the Federal Reserve (Fed) in June’s meeting are only at a low of 5.6%.
USD/INR retains the negative bias in the longer term
The Indian Rupee trades on a flat note on the day. The bearish outlook of the USD/INR pair remains in place as the price is below the key 100-day Exponential Moving Average (EMA) on the daily chart. Furthermore, downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline near 45.00. This suggests that further downside looks favorable in the near term.
The first support level for USD/INR is located at 84.78, the low of May 26. Any follow-through selling below this level could set off a drop to 84.61, the low of May 12. The additional downside filter to watch is 84.05, the lower limit of the trend channel.
In the bullish case, the 100-day EMA at 85.55 acts as an immediate resistance level for the pair. Sustained trading above the mentioned level possibly lifts USD/INR up to 85.75, the upper boundary of the trend channel. Further north, the next hurdle is seen at 85.10, the high of May 22.
