USD/INR depreciates as the Indian Rupee (INR) finds support from the United States (US)–India interim trade framework. New Delhi and Washington on Friday unveiled an interim framework aimed at lowering tariffs, reshaping energy ties, and deepening economic cooperation. The announcement follows a breakthrough in prolonged negotiations earlier last week and helped lift the Rupee to its strongest weekly gain in more than three years, according to Reuters.
Analysts at Goldman Sachs noted that the effective tariff rate imposed by the US on Indian imports could be around 20% lower than the earlier 34%. However, the US-India joint statement did not refer to India’s purchases of Russian oil and did not include any formal commitment from New Delhi to halt them.
Market participants are also monitoring signs of a revival in foreign portfolio inflows. Foreign investors have been net buyers of nearly $900 million in Indian equities so far in February, marking a sharp reversal from the roughly $4 billion outflow recorded last month.
US Dollar declines as market caution emerges ahead of looming labor data
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, loses ground for the second successive session and is trading near 97.60 at the time of writing.
- Traders will closely watch the delayed release of the US January employment report on Wednesday. The US economy is expected to add 70,000 jobs, while the Unemployment Rate is forecast to hold steady at 4.4%.
- Markets currently expect the Fed to keep interest rates unchanged in March, with potential rate cuts anticipated in June and possibly September. San Francisco Fed President Mary Daly said in a LinkedIn post on Friday that the economy may remain in a low-hiring, low-firing environment, though it could also shift toward a no-hiring, higher-firing phase.
- Michigan Consumer Sentiment Index unexpectedly rose to a six-month high. The index increased to 57.3 in February, marking a third straight monthly gain and exceeding expectations of 55.0.
- Fed Governor Phillip Jefferson said future policy decisions will be guided by incoming data and assessments of the economic outlook, adding on Friday that the labor market is gradually stabilizing. Meanwhile, Atlanta Fed President Raphael Bostic noted that inflation has remained elevated for too long, stressing in a Bloomberg interview on Friday that the Fed cannot lose sight of inflationary risks.
USD/INR falls toward 90.50 amid bearish momentum
USD/INR is trading around 90.60 at the time of writing. Daily chart analysis points to an ongoing bearish bias, with the pair trading within a descending channel pattern. The 14-day Relative Strength Index (RSI) is at 47, indicating the market is neither overbought nor oversold, with a slight bearish bias since it is below the 50 mid-point.
The immediate support lies at the 50-day Exponential Moving Average (EMA) of 90.48. A break below the medium-term price momentum will expose the lower boundary of the descending channel around 89.70. On the upside, the immediate resistance is seen at the nine-day EMA of 90.86. Further advances would lead the pair to approach the upper channel boundary around 91.80, followed by the January 28 all-time high of 92.51.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | INR | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.27% | 0.00% | -0.50% | -0.08% | -0.26% | -0.10% | -0.22% | |
| EUR | 0.27% | 0.27% | -0.24% | 0.19% | 0.00% | 0.17% | 0.05% | |
| GBP | -0.01% | -0.27% | -0.51% | -0.10% | -0.27% | -0.12% | -0.21% | |
| JPY | 0.50% | 0.24% | 0.51% | 0.41% | 0.23% | 0.39% | 0.29% | |
| CAD | 0.08% | -0.19% | 0.10% | -0.41% | -0.18% | -0.03% | -0.15% | |
| AUD | 0.26% | -0.01% | 0.27% | -0.23% | 0.18% | 0.16% | 0.04% | |
| NZD | 0.10% | -0.17% | 0.12% | -0.39% | 0.03% | -0.16% | -0.11% | |
| INR | 0.22% | -0.05% | 0.21% | -0.29% | 0.15% | -0.04% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
