USD/INR Price News: Indian rupee extends losses above 79.00 ahead of US NFP

• USD/INR picks up bids to extend recovery from weekly low.
• Geopolitics, recession weigh on prices even as China, RBI tries to lure INR bulls.
• US employment data, risk catalysts will be important for fresh impulse.

USD/INR grinds higher around 79.25, stretching the previous day’s rebound from the weekly bottom, as bulls witness US dollar demand during Friday’s Asian session. In doing so, the Indian rupee (INR) pair braces for the third weekly gain while rushing towards the record high marked on Wednesday.

The US Dollar Index (DXY) remains firmer around 107.10 while reversing the early Asian session losses after news of attack on former Japanese Prime Minister Shinzo Abe. The greenback gauge took a U-turn from the multi-day top on Thursday as mixed US data joined receding fears of economic slowdown, mainly due to Fed policymakers’ attempts to talk down the recession.

The risk-off mood also takes clues from sluggish US Treasury yields. That said, the 10-year US benchmark drops towards posting a 0.80% intraday loss, down three basis points (bps) to 2.978% at the attest. In doing so, the key bond coupons print the first daily loss in three and help the riskier assets, like the US dollar to recover early-day losses.

Also portraying the risk-off mood is the S&P 500 Futures that print 0.30% intraday loss. However, Indian equity markets are up half a percent on local news concerning big auto companies and IT firms.

It’s worth noting that the USD/INR run-up portrays the Reserve Bank of India’s (RBI) failures to restrict the INR weakness, in multiple ways like inducing USD selling and Indian rupee buying or via direct market intervention.

Looking forward, US employment numbers for June and recession headlines will be more important to watch for fresh impetus. The forecast suggests that the headlines Nonfarm Payrolls (NFP) will post the lowest monthly increase in jobs since April last year, by easing to 268K from 390K for June while the Unemployment Rate is likely to stay unchanged at 3.6% for the said month.

Also read: Nonfarm Payrolls Preview: Three dollar-positive scenarios, only one negative one

Technical analysis

The weekly ascending trend channel restricts immediate USD/INR moves between 79.60 and 78.95.