USD/INR posts modest gains above 83.00, US GDP data eyed

• USD/INR sticks to modest gains below the mid-83.00s ahead of US data.
• US Durable Goods Orders rose by 0.2% MoM vs. -5.6% prior.
• Reserve Bank of India (RBI) is likely to keep the interest rate unchanged at its October meeting.
• Investors will closely watch the US consumer inflation due on Friday.

USD/INR posts modest gains during the Asian session on Thursday. The uptick in the pair is supported by the rally of US Dollar (USD) broadly and higher Treasury yield. The pair currently trades around 83.22, losing 0.07% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, climbs to 106.65, the highest since November. The higher for longer rates narrative and risk-averse sentiment are the main drivers of the pair. However, growth risks from the possibility of an imminent government shutdown in the US might cap the upside of the Greenback against its rivals.

On Wednesday, the US Census Bureau reported that the US Durable Goods Orders rebounded in August, rising 0.2% m/m from a 5.6% drop in the previous reading, against expectations of a 0.5% m/m fall. Additionally, Durable Goods Orders ex Transportation rose by 0.4% m/m, a better than expected of 0.1% rise. Core capital goods orders rose 0.9% from the previous reading of a 0.4% drop, above the market consensus of 0%.

On the other hand, the Reserve Bank of India (RBI) is likely to maintain a status quo on interest rates for the fourth consecutive time at its upcoming monetary policy meeting scheduled for October 4-6. The benchmark repo rate was lifted to 6.5% in February and remained unchanged since then due to elevated retail inflation and global factors, including high crude oil prices.

Looking ahead, market players will monitor the US weekly Jobless Claims report, the third revision of Gross Domestic Product (GDP) for the second quarter, and Pending Home Sales data due later on Thursday. On Friday, the Indian Federal Fiscal Deficit for August, Current Account, and Reserve Bank of India (RBI) Monetary Credit and Information Review will be released. The closely watched event will be the US Core Personal Consumption Expenditure (PCE) Price Index on Friday. These figures could give a clear direction of the USD/INR pair.