- USD/INR stays mildly bid, struggles for clear directions amid mixed clues.
- Markets pare BOJ-led moves but the corrective bounce lack momentum.
- US Dollar recovers ahead of CB Consumer Confidence, Oil cheers hopes of more stimulus.
USD/INR stays defensive near 82.70, printing mild gains during the retreat on early Wednesday. In doing so, the Indian Rupee (INR) pair struggles to defend the previous day’s gains as the US Dollar rebound jostles with the firmer Oil prices, as well as the market’s cautious optimism.
US Dollar Index (DXY) picks up bids to pare recent losses around 104.10, snapping a two-day downtrend with mild gains, as US Treasury yields remain firmer despite the overall market consolidation.
That said, the DXY dropped the most in a week the previous day as the greenback traders feared less Japanese bond-buying of the US Treasury bonds due to the BOJ action. Japan is the biggest holder of the US Treasury bonds and the latest move allows Tokyo to put more funds into the nation than letting it flow outside. That said, the 10-year counterpart rose more than the two-year ones and hence reduced the yield curve inversion that suggests the odds of the recession.
On the other hand, WTI crude oil seesaws near a short-term key hurdle around $76.50, up 0.30% intraday by the press time. In doing so, the black gold cheers the broad-based US Dollar weakness, as well as cautious optimism in the market. Adding strength to the run-up could be the latest inventory data from the private data provider American Petroleum Institute (API).
It should be noted that the hopes of China’s more investment, due to the World Bank’s cutting of growth forecasts for the dragon nation and the policymakers’ readiness to battle the recession fears, favor the market sentiment. On the same line could be the US Senate’s advancement of the $1.66 trillion government spending bill, as well as Japan’s upbeat economic forecasts.
While portraying the mood, the US 10-year Treasury yields grind near a three-week high of 3.69% while the two-year bond coupons stay firmer around 4.26% by the press time. Further, Wall Street closed in green and allow stocks in the Asia-Pacific bloc to print mild gains of late. Additionally, yields on the two-year Japanese Government Bonds (JGBs) rose beyond 0.0% for the first time since 2015.
Given the mixed clues and a light calendar ahead of the US Conference Board (CB) Consumer Confidence figures for December, expected at 101.00 versus 100.00 prior, the USD/INR pair is likely to remain sluggish. However, the downbeat fundamentals surrounding India, as compared to the US, keeps the Indian Rupee bears hopeful.
Although the 10-DMA restricts immediate USD/INR downside near 82.60, upside momentum remains elusive unless witnessing a daily closing beyond the 83.00 hurdle.