- The Indian Rupee remains under pressure near an all-time low in Wednesday’s Asian session.
- Stronger USD and persistent foreign fund outflows continue to undermine the INR.
- Investors brace for the US presidential election results on Wednesday.
The Indian Rupee (INR) attracts some sellers to an all-time low on Wednesday, pressured by a rise in the US Dollar (USD) and weakness in Asian peers after the polls showed Republican candidate Donald Trump ahead of Democratic candidate Kamala Harris in the US presidential election. Furthermore, significant outflows from domestic stocks continue to weigh on the local currency.
However, the downside risk for the INR might be limited by the routine actions taken by the Reserve Bank of India (RBI) to sell the USD to prevent significant depreciation in the Indian Rupee. Investors will closely monitor the outcome of the US election ahead of the US Federal Reserve (Fed) meeting on Thursday. Meanwhile, Trump trades continue to rally as his odds improve. Analysts expect that the victory of Donald Trump could push the USD higher.
Daily Digest Market Movers: Indian Rupee seems vulnerable amid US election updates
- “Dollar is doing well, U.S. yields are on the rise and U.S. equity futures are up. Traders are getting into Trump trades based on what the U.S. election results are so far,” noted a Singapore-based hedge fund portfolio manager.
- According to the IMF, India is now estimated to overtake Japan as the world’s fourth-biggest economy by FY2025. The IMF forecasts that India’s GDP will rise to $4,340 billion next fiscal year.
- The US ISM Services Purchasing Managers Index (PMI) rose to 56.0 in October from 54.9 in September and beating the estimation of 53.8.
- The US S&P Global Services PMI came in at 55.0 in October, down from the previous reading and the consensus of 55.3.
- Financial markets are now pricing in nearly a 94% possibility of a quarter point reduction and a near 80% odds of a similar-sized move in December, according to CME’s FedWatch tool.
Technical Analysis: USD/INR remains bullish in the longer term
The Indian Rupee weakens on the day. Technically, the strong bullish outlook of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Additionally, the 14-day Relative Strength Index (RSI) holds above the midline near 67.30, suggesting that the path of least resistance is to the upside.
The key upside barrier for USD/INR emerges near the upper boundary of the ascending trend channel at84.25. Extended gains above the mentioned level could see a rally to 84.50, en route to the 85.00 psychological level.
In the bearish event, any follow-through selling below the lower limit of the trend channel near 84.05 could expose 83.79, the 100-day EMA. The next contention level is located at 83.46, the low of September 24.
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