USD/INR gathers strength ahead of Indian CPI, US CPI data

• 
  The
  Indian
  Rupee
  weakens
  in
  Friday’s
  early
  Asian
  session.
• 
  The
  renewed
  demand
  for
  US
  Dollar
  and
  recovery
  of
  crude
  oil
  prices
  undermine
  the
  INR. 
• 
  India’s
  Consumer
  Price
  Index
  (CPI)
  and
  US
  Producer
  Price
  Index
  (PPI)
  for
  June
  will
  be
  the
  highlights
  on
  Friday. 

The
Indian
Rupee
(INR)
loses
traction
on
Friday
amid
the
modest
recovery
of
the
US
Dollar
(USD).
The
demand
for
the
Greenback
from
state-run
banks
and
local
importers
limits
the
INR’s
potential
gains.
Additionally,
the
rebound
of
crude
oil
prices
also
exerts
some
selling
pressure
on
the
local
currency
as
India
is
the
third
largest
consumer
of
crude
oil
in
the
world,
after
the

United
States
and
China. 

On
the
other
hand,
the
positive
trends
in
the
Indian

stock
market,
sustained
foreign
inflows,
and
India’s
strong
macroeconomic
growth
might
underpin
the
INR.
Also,
the
rising
expectation
of
the
US

Federal
Reserve
(Fed)
rate
cut
in
September
after
the
softer
US
inflation
data
is
likely
to
weigh
on
the
USD
and
cap
the
upside
for
the
USD/INR
pair
in
the
near
term.

Later
on
Friday,
Investors
will
keep
an
eye
on
the
Indian
Consumer
Price
Index
(CPI)
data,
which
is
expected
to
show
an
increase
of
4.8%
in
June.
Also,
the
Industrial
Production
and
Manufacturing
Output
will
be
released.
On
the
US
docket,
the
US
June
Producer
Price
Index
(PPI)
and
the
preliminary
July
Michigan
Consumer
Sentiment
gauge
will
be
published.  

Daily
Digest
Market
Movers:
Indian
Rupee
remains
sensitive
to
multiple
headwinds

• The
  International
  Monetary
  Fund
  (IMF)
  estimates
  that
  shifting
  employment
  into
  construction,
  services,
  and
  manufacturing
  might
  boost
  India’s
  GDP
  growth
  by
  0.2
  to
  0.5
  percentage
  points.
• The
  US
  Consumer
  Price
  Index
  (CPI)
  rose
  3.0%
  on
  a
  yearly
  basis
  in
  June,
  compared
  to
  a
  rise
  of
  3.3%
  in
  May.
  This
  reading
  came
  in
  below
  the
  market
  consensus
  of
  3.1%,
  according
  to
  the
  US
  Bureau
  of
  Labor
  Statistics
  (BLS)
  on
  Thursday.
  On
  a
  monthly
  basis,
  the
  CPI
  declined
  0.1%
  MoM
  in
  June,
  the
  lowest
  level
  in
  more
  than
  three
  years. 
• The
  annual
  core
  CPI,
  which
  excludes
  volatile
  food
  and
  energy
  prices,
  climbed
  3.3%
  YoY
  in
  June,
  below
  the
  forecast
  and
  May’s
  increase
  of
  3.4%.
  The
  figure
  was
  up
  0.1%
  on
  a
  monthly
  basis.
• Federal
  Reserve
  Bank
  of
  Chicago
  President
  Austan
  Goolsbee
  expressed
  on
  Friday
  that
  the
  recent
  inflation
  report
  was
  “excellent,”
  adding
  that
  the
  reports
  provided
  proof
  that
  the
  central
  bank
  is
  on
  track
  to
  meet
  its
  2%
  target.
• Federal
  Reserve
  Bank
  of
  San
  Francisco
  President
  Mary
  Daly
  acknowledged
  improving
  inflation
  figures
  on
  Thursday.
  Daly
  expects
  further
  easing
  in
  both
  price
  pressures
  and
  the
  labor
  market
  to
  warrant
  interest
  rate
  cuts.
• Financial
  markets
  saw
  nearly
  85%
  odds
  of
  a
  Fed
  rate
  cut
  in
  September,
  up
  from
  the
  70%
  chance
  seen
  before
  the
  CPI
  report.
  Two
  rate
  cuts
  are
  anticipated
  this
  year.

Technical
analysis:
USD/INR
goes
into
consolidation
in
the
near
term

The
Indian
Rupee
trades
weaker
on
the
day.
According
to
the
daily
chart,
the

USD/INR
pair
keeps
the
bullish
vibe
unchanged
above
the
key
100-day
Exponential
Moving
Average
(EMA).
The
14-day
Relative
Strength
Index
(RSI)
holds
in
bullish
territory
above
the
50-midline,
suggesting
that
the
EMA
support
is
likely
to
hold
rather
than
break.
However,
in
the
shorter
term,
the
pair
has
remained
inside
its
month-long
range
since
March
21. 

Any
follow-through
buying
above
the
upper
boundary
of
the
trading
range
at
83.65
could
lead
to
a
retest
of
the
all-time
high
of
83.75.
Extended
gains
will
see
a
rally
to
the
84.00
psychological
barrier. 

Sustained
trading
below
the
100-day
EMA
at
83.37
could
pave
the
way
to
the
83.00
round
mark.
The
next
downside
target
is
seen
at
82.82,
a
low
of
January
12.