The Indian Rupee (INR) is showing signs of recovery as it opens on Monday within the Asian trading session, although it still faces potential challenges. A stronger US Dollar (USD), significant fund outflows from Indian equities, and rising crude oil prices are posed to exert downward pressure on the local currency. Market participants are closely monitoring statements from Federal Reserve officials, which could provide valuable insights into future monetary policy and potentially influence the USD’s direction.
Data from the Indian services sector revealed a drop in the HSBC India Services Purchasing Managers Index (PMI), falling to a ten-month low of 57.7 in September from August’s figure of 60.9. This decrease was unexpected, as market expectations had placed the index at 58.9. Despite this decline, the index remains above its long-term average, indicating ongoing expansion within the sector.
On the global front, employment data in the United States has shown strength, with the Nonfarm Payrolls rising by 254,000 in September, a notable increase over August’s revised figure of 159,000. The unemployment rate also decreased to 4.1%, and average hourly earnings increased to 3.8%, up from 3.6%. These indicators of a robust labor market are contributing to speculation regarding the US economic outlook and potential future policy adjustments by the Fed.
As for the INR, it is currently trading stronger, maintaining a constructive outlook. The USD/INR pair is holding above the crucial 100-day Exponential Moving Average (EMA), signaling upward momentum. The Relative Strength Index (RSI) suggests that the market sentiment remains positive. If the pair can remain above the psychological resistance level of 84.00, it may attract more buyers and push towards historic highs. Conversely, if the currency falls below the 83.80 level, further declines could ensue, testing support at the 100-day EMA and potentially targeting the 83.00 threshold.
