- The Indian rupee weakened in early European trade on Thursday.
- Continued selling in domestic stocks by foreign portfolio investors has weighed on the Indian rupee.
- Thursday's US September retail sales figures will be a highlight.
The Indian rupee (INR) traded slightly lower on Thursday due to the strength of the US dollar (USD). Heavy outflows from Indian equities and demand for US dollars from foreign banks and importers are exerting some selling pressure on the local currency.
However, India is the world's third-largest oil consumer, so a fall in oil prices as concerns about supply disruptions in the Middle East ease could support the Indian rupee. Additionally, regular foreign exchange interventions by the Reserve Bank of India (RBI) could limit the downside of the Indian rupee.
Traders are keeping an eye on September U.S. retail sales data to be released later on Thursday. Also released are weekly new U.S. unemployment claims, industrial production, and the Philadelphia Fed's manufacturing survey.
Daily Digest Market moving factors: Indian rupee continues to decline amid foreign capital outflows
- India's trade deficit was $20.78 billion in September, up from $29.65 billion in August, according to data released by the Commerce Department on Wednesday.
- India's exports in September were $34.58 billion, up slightly from $34.41 in the same period last year. Meanwhile, imports decreased to 55.36 billion items in September from 64.36 billion items a year ago.
- Foreign funds withdrew more than $7 billion from Indian stocks in the month to October 14, the most in more than four years, according to Bloomberg.
- U.S. retail sales are expected to rise to 0.3% in September from 0.1% previously.
- Traders are pricing in a nearly 94% chance that the Fed will cut interest rates by 25 basis points in November, according to the CME FedWatch tool.
Technical analysis: Constructive outlook remains for USD/INR
The Indian rupee traded in negative territory on the day. Technically, the USD/INR pair maintains a bullish tone as the price remains above the uptrend line and the important 100-day exponential moving average (EMA) on the daily chart. This upward momentum is supported by the 14-day Relative Strength Index (RSI), which sits above the midline near 58.80, suggesting the uptrend is more likely to gain traction than reverse. Masu.
If the pair continues to trade above the all-time high of 84.15, it could rise to 84.50. Further north, the next upside barrier to look at is the psychological level at 85.00.
A bearish candlestick below the uptrend line could lead to the October 10 low of 83.90. A breakout of the mentioned levels could pave the way to the 100-day EMA at 83.70. The next competitive level is 83.00, representing the round mark and the May 24th low.
