USD/INR Price News: Rupee cheers India GDP growth, China-led optimism near 82.60 ahead of US NFP

USD/INR Price News: Rupee cheers India GDP growth, China-led optimism near 82.60 ahead of US NFP
  • USD/INR holds lower grounds around intraday bottom, braces for the second consecutive weekly loss.
  • India Q2 GDP rallied 7.8% YoY versus 7.7% expected and 6.1% prior.
  • China bolsters sentiment in Asia-Pacific zone via multiple stimulus measures, actions to defend Yuan.
  • US NFP eyed as Fed’s preferred inflation pushed back policy pivot concerns but previous data prods rate hike bias.

USD/INR prints a two-day losing streak around 82.60, down 0.15% intraday, as market players brace for the all-important US employment report on Friday. It’s worth noting that the upbeat India growth figures join China-inspired optimism in the Asia-Pacific zone to exert downside pressure on the Indian Rupee (INR) pair ahead of the key US Nonfarm Payrolls (NFP).

India’s second quarter (Q2) Gross Domestic Product (GDP) offered a positive surprise the previous day by rising to 7.8% YoY from 6.1% previous readings and 7.7% market forecasts. Further, the Asian nation’s Infrastructure Output also came in at 8.0% versus 4.2% market forecasts and 8.3% prior (revised).

Elsewhere, the upbeat China manufacturing activity data and stimulus measures also weigh on the USD/INR pair, by cutting the US Dollar’s haven demand due to optimism in the Asia-Pacific zone. That said, China’s Caixin Manufacturing PMI for August rose to 51.0 versus 49.3 market forecasts and 49.2 previous readings. Further, the People’s Bank of China (PBoC) announced early Friday that it will lower the foreign exchange reserve requirement ratio to 4%, from 6.0%, effective from September 15. On the same line, a slew of China banks cut interest rates on Yuan deposits while citing the readiness to ease the pressure from lower mortgage rates, per Reuters. Among them, ICBC, China Industrial Bank, Agricultural Bank of China and Bank of China (BoC) gained major attention.

Talking about the US data, the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for August, matched market forecasts of 4.2% YoY and 0.2% MoM versus 4.1% and 0.2% respectively priors. Further, the Initial Jobless Claims dropped to 228K from 232K prior (revised) versus 235K market forecasts while the Chicago Purchasing Managers’ Index rose to 48.7 for August compared to 44.1 expected and 42.8 previous readings. Additionally, Personal Spending rose past the 0.6% expected and previous readings to 0.8% for July whereas Personal Income eased to 0.2% for the said month, from the 0.3% market forecast and prior.

Amid these plays, the MSCI’s Index of Asia-Pacific shares ex-Japan reverses the previous day’s pullback from a three-week high while Indian equity benchmarks are up on a day, backed by heavy gains in China. Further, the US 10-year and two-year Treasury bond yields remain depressed around the lowest level in three weeks while the US stock futures dwindle after a mixed Wall Street close.

Looking forward, USD/INR traders should pay attention to the risk catalysts ahead of the US employment report for August as forecasts suggest the headline US Nonfarm Payrolls (NFP) could ease to 170K. That said, the previously mixed outcomes of the JOLTS Job Openings, ADP Employment Change and Continuing Jobless Claims prod the US Dollar bulls. Additionally, the three-month average of the US NFP halves to 218K versus a year earlier. As a result, the overall scenario of the US job numbers appears downbeat and can only recall the USD/INR buyers by posting an extremely strong outcome of the job numbers.

Also read: Nonfarm Payrolls Preview: Four scenarios for a jobs report set to test US economic resilience

Technical analysis

Even if the USD/INR reverses from the 21-DMA upside hurdle surrounding 82.90, a convergence of the 50-DMA and a five-week-old rising support line, close to 82.50 appears a tough nut to crack for the pair sellers.

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