USD/INR maintains its U-turn from key DMAs to refresh multi-day lows and has recently recovered from an intraday low.
In anticipation of India’s CPI, there is a cautious mood and a mixed mood in Asia.
The US dollar bears the weight of risk-on sentiment influenced by SVB and falling hawkish Fed bets.
Early on Monday morning in Europe, bids to reduce intraday losses for USD/INR rise to around 81.95. In doing so, the Indian Rupee (INR) pair struggles to cheer the weakness of the US Dollar in light of mixed concerns in Asia and the overall weakness of the US Dollar. The cautious mood ahead of the key inflation numbers for India and the US could also be challenging for pair traders.
Asia-Pacific shares trade mixed because they haven’t recovered from Friday’s bond and stock market collapses and have to deal with worries about China.
As he stated earlier on Monday that they must resolutely oppose the interference of external forces, also known as the “split” of Taiwan, a new term for China’s President Xi Jinping keeps the Sino-American tension on the table. It’s important to note that Wall Street went into the red on Friday and that US bond yields also fell for the first time in a month due to concerns about the fallouts from Signature Bank and Silicon Valley Bank (SVB). However, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the US Treasury Department collaborated over the weekend to reduce the risks. “American people and American businesses can have confidence that their bank deposits will be there when they need them,” US President Joe Biden stated in response to the actions of the US regulators.
S&P 500 Futures rose nearly 1.60 percent to 3,960 at press time after rebounding from a 2.5-month low. Meanwhile, US Treasury bond yields reversed their early-day rise from a monthly low, posing new challenges for hawkish Fed bets.
However, the aftermath of Signature Bank and SVB highlighted the fragile state of US banks, dampening hopes of further rate increases from the Fed. In light of this, Goldman Sachs anticipates a rate increase in March, and Fed Fund Futures has lowered its previously optimistic odds of a 0.50% rate increase in March.
Consequently, the USD/INR bears face challenges from the cautious mood ahead of India’s key inflation data and mixed Asia sentiment, despite the risk-on sentiment supporting the USD’s weakness.
Short-term USD/INR movements will be influenced by the India Consumer Price Index (CPI) for February, which comes before Tuesday’s WPI Inflation numbers and the US CPI for the aforementioned month. The US Dollar may recoup some of its recent losses if the schedule data indicate concerns about inflation, which would test the pair bears.