USD/INR gains traction above 83.00, eyes on US PMI ahead of RBI rate decision

• USD/INR gains momentum above 83.00 as the US Dollar (USD) resumes its upward path.
• Reserve Bank of India (RBI) is likely to maintain a status quo in the upcoming interest rate meeting.
• The annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations.
• RBI rate decision will be a closely watched event on Friday.

USD/INR holds positive ground around 83.15 during the Asian session on Monday. The uptick of the pair is supported by the stronger US dollar (USD) and the higher-for-longer rate narrative in the US. Investors await the Reserve Bank of India (RBI) rate decision, which is expected to keep the policy repo rate steady on Friday.

RBI will begin its three-day meeting on Wednesday and the interest rate decision will be announced on Friday. RBI is likely to maintain a status quo on interest rates for the fourth consecutive time at its upcoming monetary policy meeting. Due to elevated retail inflation and global factors, including high crude oil prices, the benchmark repo rate was raised to 6.5% in February and remained unchanged since then

On the USD front, Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Fed Bank of Richmond President Thomas Barkin said that the central bank holding steady at the September FOMC meeting was appropriate and Fed has time to see data before deciding what’s next for rates.

About the data on Friday, the Personal Consumption Expenditures (PCE) Price Index rose by 3.5% YoY in August from the previous month of 3.4%, in line with the market estimation. The annual Core PCE Price Index grew 3.9% from 4.3% in July, meeting the expectation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose by 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market estimations.

Traders will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday. The hawkish comments from officials could boost the US Dollar (USD) and act as a tailwind for USD/INR.

Market players will monitor the US ISM Manufacturing PMI for September due on Monday, followed by the Fed Chair Powell’s speech. Later this week, S&P Global India Services PMI for September will be released on Thursday. On Friday, RBI will announce the monetary policy decision. These figures could give a clear direction of the USD/INR pair.