On Monday, the Indian Rupee (INR) is experiencing a slight appreciation, even as the US Dollar (USD) strengthens. The recent decline in crude oil prices is offering some relief to the Indian currency, given that India is the third-largest consumer of oil globally. However, upward momentum for the INR may be limited due to ongoing foreign capital outflows from the domestic equity market and expectations of a gradual approach to interest rate cuts by the US Federal Reserve.
Market participants are closely monitoring various key economic indicators from the US. On Wednesday, the advanced Gross Domestic Product (GDP) figures for the third quarter will be released, followed by the Core Personal Consumption Expenditures (PCE) Price Index for September on Thursday. A critical focus will also be on the upcoming Nonfarm Payrolls (NFP) report expected on Friday, which may influence Federal Reserve policy decisions.
In terms of India’s economic outlook, projections indicate that growth could range between 7.0% and 7.2% for the fiscal year 2024-25. Recent reports from market analysts reveal an increase in the HSBC Manufacturing Purchasing Managers Index (PMI) to 57.4 in October, up from 56.5 in the previous month. The Services PMI also showed improvement, rising to 57.9 in October from a one-year low of 57.7 recorded in September.
In the US, consumer sentiment has shown positive signs, with the Michigan Consumer Sentiment Index climbing to 70.5 in October, surpassing previous expectations. Additionally, Durable Goods Orders experienced a month-on-month decline of 0.8% in September, which, although negative, was less severe than the anticipated 1% drop. Excluding transportation, durable goods saw a modest increase of 0.4% in the same period. Current market sentiment has positioned a high probability for the Federal Reserve to lower rates by 25 basis points in November.
Despite the current fluctuations, technical indicators suggest that the bullish trajectory for the USD/INR trading pair remains intact. The price of the pair is currently above its 100-day Exponential Moving Average (EMA), with the Relative Strength Index (RSI) nearing 60, indicating potential for further upward movement. Immediate resistance can be seen at 84.20, with a breakthrough possibly targeting 84.50 and eventually the significant 85.00 level. On the downside, initial support is identified near 84.05, while the next critical support level is at 83.75.
