- USD/INR stalls the previous day’s declines.
- US-China nears the final signing of phase-one, China’s President warns the US to stay out of internal issues.
- RBI’s planned OMO and trilateral meet in China concerning North Korea in focus for now.
USD/INR traders cheer the weekend news, surrounding the US-China trade deal, as the pair rises to 71.16 amid the initial trading hours of Indian market’s open on Monday.
The US President Donald Trump crossed wires, via Reuters, over the weekend while confirming a breakthrough in the trade discussion with China. The Republican leader also signaled the formal signing of the phase-one deal in the near future.
Though, the US passage of the defense bill spoiled the mood as China terms it as interference in the internal matters.
The pair might also have been preparing for the Reserve Bank of India’s (RBI) planned open market operations (OMO). The CNBC says, “the RBI said it will conduct a special OMO in a move seen by market participants as an attempt to bring long-term yields lower.” News broke on Friday that the RBI would simultaneously purchase and sell government securities worth Rs 10,000 crore under a special Open Market Operation (OMO) on Monday.
Further, the sluggish performance of Asian markets and a downbeat reading of the US 10-year treasury yields seem to have added weight on the pair.
In addition to keeping eyes on RBI’s OMO, traders will also follow updates from China where leaders from Beijing, Japan and South Korea will hold a trilateral meeting. Even if the agenda is not precise, Reuters cited likely discussion on North Korea to take place.
On the economic calendar, the US Durable Goods Orders can entertain market players for the one last time before the holiday mood kicks in.
Overall, Bloomberg relies on analysis conducted by the TD Securities’ analyst while suggesting the recent recovery to reach till 73.00 by March-end. “Experts are associating December’s rise with a one-off corporate inflow of about $6 billion and the Reserve Bank of India’s (RBI) decision to sell $130 million of FX assets in the week ended Dec. 6,” says the news.
Technical Analysis
21, 50 and 100-day Simple Moving Averages (SMAs) limit the pair’s near-term upside around 71.20/30 and hence a daily closing beyond that could trigger pair’s fresh advances. On the downside, 70.70 and 200-day SMA level of 70.30 can question the Bears’ targeting 70.00 round-figure.
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