A raft of positive fundamental data served up some Indian Rupee (INR) strength on Friday as the USDINR drifted to just shy of March lows. With no major releases scheduled until Friday, traders will look to US releases to dictate sentiment in the pair.
Friday, March 21, saw three major releases out of India. The first, the foreign reserves figure, came in at $297.29B, beating expectations of $295.45B. The second, bank loan growth, again beat expectations, reported at 14.7% versus a forecast 14.3%. Finally, deposit growth YoY came out at 15.6% versus 15.8%, suggesting a bias towards consumption.
The gain saw the USDINR dip to daily lows despite positive US data, at 60.800, before correcting to 60.905 to close out the week. A small consolidation phase preceded a sharp decline as the markets opened on Monday, with the pair dropping to 60.630 within an hour of the open. The day’s action has seen something of a range to the US open, with the pair trading between range resistance around 60.822 and range support just shy of 60.822.**relatedarticle**
This range will likely hold heading into the US open, with scheduled data likely to catalyze a breakout. US purchasing managers index (PMI) data is scheduled for release shortly after the open; a better than expected release would like cause a break of 60.822 resistance and offer up an initial target at in-term support of 60.899. A close above this level would hint at further upside, with previous resistance at 61.114 offering up a nice short-term target.
Conversely, a disappointing US PMI data release would likely break the pair below range support at 60.658. A close below this level could set a bearish tone for the day, with an initial target at March lows of 60.571, with the potential for fresh monthly lows beyond that level.
All said, fundamentally, both the US and India look to be relatively strong at the moment. This serves up a situation in which a small data driven advantage could create some strong volatility in the pair.
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