USD/INR Price News: Indian Rupee slides to 82.80 as hawkish Fed concerns propel US Dollar

• USD/INR clings to mild gains during the first positive daily performance in three.
• Upbeat US data, hawkish Fed talks propel Treasury bond yields and the US Dollar.
• Sluggish Oil price, mixed sentiment in Asia fail to help Indian Rupee in extending previous gains.
• Light calendar ahead of next week’s FOMC Minutes can keep buyers hopeful.

USD/INR remains mildly bid around 82.75-80, after a gap-up opening to 82.80, amid the broad US Dollar strength during early Friday. In doing so, the Indian Rupee (INR) pair snaps a two-day losing streak amid mostly downbeat sentiment.

US Dollar Index (DXY) grinds near the six-week top surrounding 104.30, marked earlier in Asia, as it cheers the hawkish concerns about the Federal Reserve’s (Fed) next move amid strong US data and upbeat comments from the Fed policymakers.

Producer Price Index (PPI) for January gained major attention by rising the most since June with 0.7% MoM figure. Also positive for the USD/INR pair was the improvement in the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. On the contrary, a slump in the Housing Starts for January and the Philadelphia Fed Manufacturing Survey for February seemed to have gained a little attention.

Following the data, the FEDWATCH tool, observed via Reuters, suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. The same signals a higher policy pivot than the 5.10% peak conveyed by the Fed in the December meeting, which in turn hints at a few more rate hikes from the US central bank and favors the US Dollar.

It should be noted that Cleveland Fed President Loretta Mester recently teased the recession woes while repeating the previous defense of the highest rates. Before that, St. Louis Federal Reserve's James Bullard bolstered the hawkish Fed bias while saying, “Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.”

Other than the Upbeat US data, Fed bets and hawkish comments from the Fed policymakers, the fears emanating from China also weigh on the sentiment and underpin the USD/INR rebound. That said, US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. “I think the last thing that Xi wants is to fundamentally rip the relationship with the United States and with me," said US President Biden per Reuters.

Amid these plays, S&P 500 Futures mark 0.30% intraday losses to 4,086 while poking the weekly low after falling the most in a month on Thursday. Additionally, the US 10-year Treasury bond yields rise to a fresh high since December 30, 2022, whereas the two-year US Treasury bond also renews the highest levels since November 2022, making rounds to 3.88% and 4.68% in that order.

It’s worth mentioning that the Oil price weakness and the Reserve Bank of India’s (RBI) hawkish concerns seem challenging the USD/INR bulls amid a light calendar ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting minutes.

Technical analysis

A sustained bounce off the 10-day Exponential Moving Average (EMA), around 82.60 by the press time, keeps USD/INR buyers hopeful of crossing the four-month-old resistance line near the 83.00 round figure.