USDINR
On Tuesday, USDINR is most likely to commence between 82.70 – 82.80 levels as dollar gained across the board, regaining some of the luster it lost earlier in the month, bolstered by expectations of another supersized rate increase at this week's Federal Reserve monetary policy meeting.
The Indian rupee has declined in each of the ten months this year to notch its biggest losing streak in almost four decades as the U.S. Federal Reserve's hawkish stance on monetary policy catapulted the dollar to two-decade highs.
India's federal fiscal deficit in the first half of the financial year through September rose to 6.20 trillion rupees ($74.91 billion) from 5.27 trillion a year earlier, though rising tax collections helped offset a higher subsidy bill. India's fiscal deficit for the April to September period touched 37.3% of annual estimates, official data showed on Monday, as the government spent more on fertiliser, food and fuel subsidies.
USDINR TECHNICAL
Day Trend: - BUY ON DIP
Weekly Trend: - UPSIDE SELL
INTRADAY RANGE – 83.47 (83.00 – 82.53) 82.06
THE FED
The Fed is widely expected to raise its benchmark overnight interest rate by 75 basis points (bps) to a range of 3.75% to 4.00%, its fourth such increase in a row. But for the December meeting, fed funds futures have priced in on Monday a 55% chance of a 50-bps rate increase, down from about 67% last Friday.
THE JAPAN
Japan's finance ministry said it spent a record $42.8 billion on currency intervention this month to prop up the yen. A steep drop in the yen to a 32-year low of 151.94 to the dollar on Oct. 21 likely triggered the intervention, followed by another one on Oct. 24.
THE STERLING
Sterling fell 1.19% against the dollar to $1.1477. The BoE is likely to deliver a 75-basis point hike at Thursday’s meeting; although analysts said longer-term rate expectations are coming under sustained pressure.
BoE Deputy Governor Ben Broadbent recently suggested that the borrowing costs priced by investors would hammer the UK economy, noting that he's doubtful Britain could engineer a "soft-landing" - a U.S. term for bringing inflation back to target without significantly damaging the real economy.
THE AUSTRALIA
The Reserve Bank of Australia (RBA), meanwhile, is tending towards the dovish end of the spectrum and is expected to raise interest rates by a more modest 25 BPS at its Tuesday meeting, even as inflation raced to a 32-year high last quarter.
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