- USD/INR steps back from three-week high after two-day uptrend.
- RBI Governor Das said that India is at the doorstep of economic revival.
- US dollar bounces off seven-week low as risk tone sours.
- Risk catalysts remain as the key drivers amid a light calendar.
USD/INR slips from the monthly high to 73.71 during the initial hour of the Indian trading session. The pair earlier benefited from the broad US dollar gains, as well as virus woes in India. However, upbeat comments from the Reserve Bank of India (RBI) Governor, published Wednesday, gained market attention as the Indian traders gain pace.
In a panel discussion conducted by Bloomberg Quint, RBI Governor Shaktikanta Das said, as per Reuters, that India is “at the doorstep of the revival process’ from the coronavirus (COVID-19) pandemic.” The RBI chief also mentioned, “Both fiscal and monetary policy were counter-cyclical and accommodative and both were working in close symmetry,” while adding, “the fiscal measures taken by the government to deal with the pandemic have so far have been well-calibrated and prudent,” said the news.
Elsewhere, the COVID-19 numbers from India have peaked in September while data from the US suggests over 50% of states refresh the monthly record of new cases the previous day. Though, Reuters convey the expert warnings ahead of the festival season to probe the Indian rupee (INR) bulls.
The market’s mood also depicts the fresh geopolitical tension emanating from the US Federal Bureau of Investigations (FBI) update that Iran and Russia meddled with the American elections.
In doing so, optimism surrounding the US COVID-19 stimulus and Brexit have been faded off-late.
As a result, stocks in Asia-Pacific and the US stock futures stay mildly offered whereas the US 10-year Treasury yields also stop the previous day’s rise beyond 0.80%. This also speaks loud for the US dollar’s bounce off the early September lows.
Given the lack of major data/events, USD/INR traders need to watch over the risk catalysts for near-term trade directions. However, virus woes and cautious optimism concerning the American aid package, Brexit can favor the US dollar going forward.
A failure to provide a daily closing beyond the 50-day EMA level of 73.75 keeps USD/CHF sellers hopeful. Though, fresh selling can wait for a clear break below the support line from August 25, previous resistance, around 73.60.
Credit: FX Street