• USD/INR struggles to extend the latest recovery ahead of key trade deficit, manufacturing/industrial output from India.
  • The Indian rupee (INR) pulls back after Moody’s downgraded growth forecasts.
  • The US markets close, broader risk-off could see further weakness if data surprises.

While Moody’s cut to Indian growth outlook and broad USD strength propelled the USD/INR pair to multi-week high on Friday, prices seem to step back ahead of the key India data while flashing 71.33 as a quote on early Monday.

The global rating agency downgraded India’s credit outlook from ‘stable’ to ‘negative’ while citing government’s and policy ineffectiveness in addressing economic weakness as the main factor for the downward revision. The same could have been the reason for increasing odds concerning the Reserve Bank of India’s (RBI) another rate cut in December.

Even so, the Asian country’s foreign exchange reserve, as conveyed by the RBI on Friday, rose by $3.515 billion to a fresh record high of $446.098 billion in the week ended on November 1.

Recently, trade concerns surrounding the United States (US) and China have been mixed while renewed protests in Hong Kong and geopolitical crisis in the Middle East seem to weigh on the market’s risk-tone. As a result, the S&P500 Futures stay near 0.20% in the loss while most Asian stocks keep the red.

Moving on, the absence of the US and Indian traders could restrict the pair’s performance but key data on the Indian economic calendar might not lose its importance to offer intermediate moves. Among them, October month Trade Deficit, coupled with the September month Industrial and Manufacturing Output, will be the key to watch.

While Trade Deficit is expected to increase to $12.05 billion from $10.86 billion, Industrial Outputs is likely declining further to -2.0% from -1.1% prior. It should also be noted that Manufacturing shrank 1.2% in August.

Technical Analysis

Although pair’s successful trading above 50-day Simple Moving Average (SMA) level of 71.16 keeps buyers hopeful, October month high around 71.80 and September 19 top near 72.33 can challenge the quote’s further upside.