By Raj Deepak Singh
Rupee appreciated in the last week amid sharp drop in crude oil prices. Further, rupee was supported by significant inflows in domestic equity markets and drop in Indian federal fiscal deficit. Dollar index edged higher and touched its 20-years high amid hawkish comments from Federal Reserve Chair Jerome Powell. Powell told the Jackson Hole central banking conference in Wyoming on Friday that the Fed would raise rates as high as needed. Further, dollar was supported by strong economic data from the US. The number of job openings in the US rose by 199,000 from a month earlier to 11.2 million in July of 2022 against market expectations of 10.45 million.
Additionally, the number of Americans filing new claims for unemployment benefits decreased to 232 thousand in the week ended August 27th from a downwardly revised 237 thousand in the previous period. At the same time, continued weak economic data from Europe also provided support to the Dollar index. Moreover, sharp rise in US 10 years’ treasury yields helped dollar to make new highs. We expect rupee to trade with a positive bias and touch 79.60 levels this week. Moreover, sharp drop in crude oil prices and uptick in domestic equity markets will support rupee to appreciate further. Investors will keep an eye on major economic data from the US like services PMI, ISM Non-Manufacturing PMI, initial jobless claims. ISM non-manufacturing PMI data is expected to drop from 56.7 to 54.8.
USDINR traded in ascending triangle pattern, after touching support wedge at 79.45 it reversed back towards the resistance level at 80.30. The pair is expected to continue trading towards the resistance level at 80.30 and then reverse back towards the support level at 79.60 this week. Until it breaks the resistance wedge at 80.30 level it is likely to trade in the range of 80.30 to 79.60 levels.
For Monday, Rupee may depreciate amid strong US dollar index. However, rupee may be supported by strength in domestic equity markets and continues drop in crude oil prices. USDINR (Sep) is likely to trade towards the resistance level at 80.30.
(Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities at ICICIdirect. The views expressed are the author’s own. Please consult your financial advisor before investing)