The Indian Rupee has been consolidating in a wide trading range against the greenback. This trading range was activated since the beginning of August and as long as there isn’t any big shift in the macro landscape, we should expect this range to be still active. To promote trend development the USD/INR exchange rate needs a strong fundamental theme to resuscitate it.
The shift in the Fed’s interest rate policy, which is down the path to cut rates, has provided a window of opportunity for the Indian Rupee bulls to take advantage. But, the trade war is not a favorable market theme to support the Indian Rupee. However, we can expect the Indian Rupee to be supported in case of a clear agreement between the US and China officials on the phase one deal.
The IMF had a couple of warnings about recession due to the trade war’s negative impact on global growth. Secondly, the Chinese economy only posted a 6% growth in Q3 2019, the slowest pace of growth that we’ve seen since 1992. These are proxy risk events that could harm the India Rupee.
The only notable risk event that can alter the market volatility is scheduled on the US economic calendar. On Thursday the US Durable Goods Orders will hit the market. According to the general consensus, the core number is expected to fall by -0.8% versus 0.2% previous reading.
The US Durable Goods Orders figure will be released along with the Markit Manufacturing PMI data. The market consensus is expecting the manufacturing activity to slow down to 50.5 versus 51.1 previous reading.