- USD / INR reverses yesterday’s losses and refreshes intraday high.
- AfDB cuts India’s GDP forecast for fiscal 22, Indian parliament pushes stimulus over 1.87 crore.
- Indian markets are closed, virus updates, voting on US infrastructure in focus.
USD / INR is showing slight gains around 74.60, even Indian markets are down on Wednesday. In doing so, the Indian Rupee (INR) justifies covid woes at home and abroad while adhering to the strength of the US dollar.
That said, the US Dollar Index (DXY) shows a five-day bullish trend around April highs, up 0.06% intraday to around 93.02 at press time as the variant of Delta’s covid weighs on market sentiment. The Sino-US clashes could also constitute a safe haven offer under the greenback. Additionally, hopes of further stimulus from US President Joe Biden also support the US dollar bulls.
While a slower jab has already put Australia in economic jeopardy, India is also struggling when it comes to vaccinations. On Tuesday, an Indian government official said that “one in three is likely to be infected with covid-19”.
The deadlock over the 1.87 lakh crore stimulus in the Indian parliament is also negative for the INR, as a routine home drama brought negotiations to an end ahead of today’s recess.
As a result, the Asian Development Bank (ADB) is reducing the Asian nation’s GDP forecast for fiscal 2022 to 10%, from 11% forecast earlier.
Elsewhere, comments by US Under Secretary of State Wendy Sherman also amplify the risky mood and support the US dollar as the diplomat voices his concerns over North Korea and China at the trilateral meeting in Tokyo.
Amid those games, 10-year US Treasury yields fade and rebound from February lows as Asia-Pacific stocks attempt a rally.
While the Indian holiday may restrict USD / INR movements, the overall strength of the US dollar could keep buyers of pairs bullish. It should be noted that the US Senate procedural vote on the infrastructure spending bill will be key, while Covid updates and Sino-US tensions, not to mention Indian political news, may act as additional catalysts.
Unless offering a daily close below the 74.50-45 area, including a 21 day SMA and monthly support line, USD / INR sellers remain unable to take orders.