Rupee Edges Up to 96.25 as RBI Policy Week Begins

FXStreet··INUS·Read original
3▲1 ▼1Impact / 5
Summary · why it matters

The Indian Rupee opened marginally higher against the US Dollar at the start of the Reserve Bank of India's monetary policy week, with USD/INR ticking down to near 96.25 as traders trimmed hawkish Federal Reserve rate expectations. According to the CME FedWatch tool, the odds of the Fed leaving interest rates unchanged at this month's policy meeting have risen to 82.3% from 35.8% seen last week, after US Nonfarm Payrolls for September showed the economy created just 29K fresh jobs, below 90K estimates and a previous reading of 133K revised lower from 162K, while the Unemployment Rate rose to 4.2% and Average Hourly Earnings grew 3% year-on-year. Despite the cooler Fed bets, the US Dollar Index posted a fresh yearly high near 102.53 and 10-year US Treasury Yields held around 5.27%, not far from last week's two-decade high of 5.34%. The major trigger for the Rupee this week is the RBI's monetary policy announcement on Wednesday, with analysts at MUFG/BTMU officially forecasting the central bank to keep rates on hold while calling for a hiking cycle to begin from December, seeing a good chance the RBI moves its stance away from neutral to signal a tightening bias. MUFG/BTMU forecast 50bps of rate hikes this cycle with some risk of 75bps in total, citing strong growth, abundant liquidity, picking-up credit growth, supportive fiscal policy, and upside inflation risk from higher commodity prices and adverse weather conditions in India.

Impact on assets 3

Others▲ · 2 stocks
％India Government Bond 10Y
IN-10Y
▲ PositiveMonetaryrelevance

RBI expected to hold rates and signal a tightening bias with 50-75bps of hikes, pushing Indian bond yields higher.

％United States Government Bond 10Y
US-10Y
± MixedMonetaryrelevance

Cooler US jobs data trimmed Fed hike odds, but 10Y Treasury yields held near 5.27% and the dollar hit a fresh yearly high, giving no clear direction.

Others▼ · 1 stocks
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