The impact of US tariffs on India is mitigated by a slightly declining US dollar, which causes the Indian Rupee to flatten around 87.80.
In August, FIIs had sold Indian stocks for a total of Rs. 34,733.75 crores.
Interest rate reductions are made possible by Fed's Williams.
Following a vacation on Wednesday due to Ganesh Chaturthi, the Indian Rupee (INR) is trading nearly unchanged versus the US dollar (USD) at 87.80 during opening trading hours on Thursday. The weak performance of the US dollar supports the USD/INR pair.
But with Russia-related tariffs on Indian goods that US President Donald Trump imposed earlier this month going into force on Wednesday, the Indian Rupee's future is in jeopardy.
In order to reduce the competitiveness of Indian products in the global market and compel exporters to offer their goods at reduced rates, goods coming into the US for consumption or being taken out of warehouses for consumption from India will now be subject to a 50% extra levy.
In addition, due to trade concerns, foreign investors have been steadily reducing their holdings in Indian stock markets. The value of the equity shares sold by Foreign Institutional Investors (FIIs) on Tuesday was Rs. 6,516.49 crores. FIIs have sold stock of Rs. 34,733.75 crores so far in August. Benchmark indices have been negatively impacted by the steady drain of foreign investment from Indian markets. The Nifty50 has dropped more than 4% since reaching its most recent peak of 25,670 on June 30.
Investors are waiting for the June factory data, which is scheduled to be released at 10:30 GMT. It is anticipated that the Industrial Output would increase from the previous estimate of 1.5% to 2.1%.
Daily digest market movers: Fed Williams' dovish comments put selling pressure on the US dollar
Following dovish comments on interest rates made by New York Federal Reserve (Fed) Bank President John Williams in an interview with CNBC on Wednesday, the US dollar is under some selling pressure on Thursday.
As of this writing, the US Dollar Index (DXY), which measures the value of the US dollar relative to six major currencies, is slightly down, hovering around 98.10.
The Fed's Williams said on Wednesday that since the "economy is going through an adjustment phase," interest rates should eventually be pushed close to "neutral."" At the September policy meeting, he did not support a reduction in interest rates, but he left the option open since authorities want to evaluate the next data before making a decision. "Risks are more evenly distributed. We simply need to wait and see how the data develops," Williams stated.
According to the CME FedWatch tool, traders believe there is an 87% possibility that the Fed will lower interest rates in September.
Investors are looking forward to Friday's release of the US Personal Consumption Expenditure Price Index (PCE) data for July for new clues on the interest rate outlook. With monthly statistics climbing gradually by 0.3%, economists predict that US core PCE inflation—the Fed's preferred inflation measure—will have increased at a quicker rate of 2.9% year over year compared to 2.8% in June.
On a larger scale, the US dollar's future is unclear due to the continuous conflict between US President Trump's economic policies and the Fed's independence. Trump said in a letter earlier this week that Fed Governor Lisa Cook had been fired due to mortgage-related charges. In retaliation, Fed's Cook declared she would sue to maintain her position.
The event has been interpreted by market analysts as an assault on the Fed's independence, which would cast doubt on the US dollar's allure as a safe haven. Naturally, investors will begin to doubt the Fed's independence more and more, which will lead to a steeper yield curve and a declining value of the dollar, according to ING analysts, as reported by Reuters.
Technical Analysis: The 20-day EMA is maintained by the USD/INR
On Thursday, the USD/INR pair flattens out around 87.80. The pair's short-term trend is still optimistic because it is still above the 20-day Exponential Moving Average (EMA), which is trading close to 87.44.
Over 60.00, the 14-day Relative Strength Index (RSI) increases. If the RSI remains above that level, new bullish momentum would appear.
Looking downward, the major will find important support at the low of 86.55 on July 28. On the plus side, the pair will face a significant obstacle at the high of 88.25 on August 5.
In August, FIIs had sold Indian stocks for a total of Rs. 34,733.75 crores.
Interest rate reductions are made possible by Fed's Williams.
Following a vacation on Wednesday due to Ganesh Chaturthi, the Indian Rupee (INR) is trading nearly unchanged versus the US dollar (USD) at 87.80 during opening trading hours on Thursday. The weak performance of the US dollar supports the USD/INR pair.
But with Russia-related tariffs on Indian goods that US President Donald Trump imposed earlier this month going into force on Wednesday, the Indian Rupee's future is in jeopardy.
In order to reduce the competitiveness of Indian products in the global market and compel exporters to offer their goods at reduced rates, goods coming into the US for consumption or being taken out of warehouses for consumption from India will now be subject to a 50% extra levy.
In addition, due to trade concerns, foreign investors have been steadily reducing their holdings in Indian stock markets. The value of the equity shares sold by Foreign Institutional Investors (FIIs) on Tuesday was Rs. 6,516.49 crores. FIIs have sold stock of Rs. 34,733.75 crores so far in August. Benchmark indices have been negatively impacted by the steady drain of foreign investment from Indian markets. The Nifty50 has dropped more than 4% since reaching its most recent peak of 25,670 on June 30.
Investors are waiting for the June factory data, which is scheduled to be released at 10:30 GMT. It is anticipated that the Industrial Output would increase from the previous estimate of 1.5% to 2.1%.
Daily digest market movers: Fed Williams' dovish comments put selling pressure on the US dollar
Following dovish comments on interest rates made by New York Federal Reserve (Fed) Bank President John Williams in an interview with CNBC on Wednesday, the US dollar is under some selling pressure on Thursday.
As of this writing, the US Dollar Index (DXY), which measures the value of the US dollar relative to six major currencies, is slightly down, hovering around 98.10.
The Fed's Williams said on Wednesday that since the "economy is going through an adjustment phase," interest rates should eventually be pushed close to "neutral."" At the September policy meeting, he did not support a reduction in interest rates, but he left the option open since authorities want to evaluate the next data before making a decision. "Risks are more evenly distributed. We simply need to wait and see how the data develops," Williams stated.
According to the CME FedWatch tool, traders believe there is an 87% possibility that the Fed will lower interest rates in September.
Investors are looking forward to Friday's release of the US Personal Consumption Expenditure Price Index (PCE) data for July for new clues on the interest rate outlook. With monthly statistics climbing gradually by 0.3%, economists predict that US core PCE inflation—the Fed's preferred inflation measure—will have increased at a quicker rate of 2.9% year over year compared to 2.8% in June.
On a larger scale, the US dollar's future is unclear due to the continuous conflict between US President Trump's economic policies and the Fed's independence. Trump said in a letter earlier this week that Fed Governor Lisa Cook had been fired due to mortgage-related charges. In retaliation, Fed's Cook declared she would sue to maintain her position.
The event has been interpreted by market analysts as an assault on the Fed's independence, which would cast doubt on the US dollar's allure as a safe haven. Naturally, investors will begin to doubt the Fed's independence more and more, which will lead to a steeper yield curve and a declining value of the dollar, according to ING analysts, as reported by Reuters.
Technical Analysis: The 20-day EMA is maintained by the USD/INR
On Thursday, the USD/INR pair flattens out around 87.80. The pair's short-term trend is still optimistic because it is still above the 20-day Exponential Moving Average (EMA), which is trading close to 87.44.
Over 60.00, the 14-day Relative Strength Index (RSI) increases. If the RSI remains above that level, new bullish momentum would appear.
Looking downward, the major will find important support at the low of 86.55 on July 28. On the plus side, the pair will face a significant obstacle at the high of 88.25 on August 5.
