Rupee Struggles Ahead of Powell's Remarks and US Inflation Data
The Indian rupee is likely to face continued challenges on Thursday, having failed to surpass the crucial resistance level of 83.50 against the US dollar. Traders are now keenly awaiting comments from Federal Reserve Chair Jerome Powell for insights into the trajectory of future US interest rate cuts.
The 1-month non-deliverable forward indicated an expected rupee opening in the range of 83.63 to 83.65 per dollar, slightly weaker than the previous session’s close at 83.59.
Analysts believe breaking past the 83.40-83.50 range will be a significant hurdle for the rupee, and recent price movements have supported this view. One market expert noted that diminishing enthusiasm in Asian currencies, particularly following the muted impact of China's stimulus measures, further weakens the rupee's position.
The rupee could decline to 83.75 in the coming sessions, settling into the midpoint of its recent trading range. Traders are also closely watching Powell’s upcoming statements, alongside remarks from other Federal Reserve officials, to gauge the likelihood of further rate cuts after the central bank's recent 50-basis-point reduction.
Market sentiment is leaning towards a potential repeat of the 50-bps cut at the Fed's November meeting, as indicated by swap market pricing. However, the focus has shifted more towards the US labor market, with inflation concerns taking a backseat for the moment.
Data on US jobless claims, due for release on Thursday, will offer further clarity on labor market conditions. Meanwhile, the core PCE index, the Fed's preferred inflation gauge, will be released on Friday, providing key insights into current inflationary pressures.
The rupee has struggled to breach the 83.50 mark for three consecutive sessions, a level seen as pivotal for the currency to maintain any upward momentum.
