USDINR
On Wednesday, USDINR is likely to commence between 82.25 – 82.35 levels as dollar traded little changed on early Asian session after strong consumer price data revived the likelihood that the Federal Reserve will hike interest rates next week as fears of turmoil spreading in the banking sector faded.
India's annual wholesale price-based inflation eased to the lowest in over two years, dragged down by a fall in overall input costs for manufacturers on the back of favourable commodity prices. WPI in February eased to 3.85% year-on-year, compared with 4.73% in the previous month.
USDINR TECHNICAL
Day Trend: - BUY ON DIP
Weekly Trend: - HOLD
INTRADAY RANGE – 82.76 (82.53 – 82.30) 82.07
THE DOLLAR DANCE
Fed funds futures showed the market's risk adverse mood in recent days eased as bets that the Fed would stand pat at its policy meeting March 21-22 declined. That probability fell to 28.4% from 43.9% on Monday, according to CME's FedWatch Tool.
But with the likelihood of a 50 basis point hike next week off the table, the dollar's recent strength from higher rates on Treasury notes than foreign government debt also retreated.
The Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January. In the 12 months through February, the CPI increased 6.0%, a slower pace than the 6.4% annualized gain in January, but still far off the Fed's 2% target.
THE STERLING
The Bank of England's next policy meeting is next week, a day after the Fed's. However, the pound has some event risk this week, with the government's new budget for the coming year due to be presented to parliament on Wednesday.
Sterling was still supported by labor market data showing a bigger-than-expected increase in employment in the three months through January that kept the jobless rate at a historically low level of 3.7%. Growth in average earnings weakened from the record levels it has posted in the previous two months.
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