USD/INR edges higher despite optimism on US-India trade deal

• The Indian Rupee faces pressure against the US Dollar despite hopes of a trade deal between the US and India soon.
• FIIs turned out net sellers in the Indian stock market for the third trading day in a row.
• Signs of accelerating US lay-off trend weigh on the US Dollar.

The Indian Rupee (INR) opens cautiously against the US Dollar (USD) on Friday. The USD/INR pair ticks up to near 88.75 despite hints from United States (US) President Donald Trump that his relations with Indian Prime Minister (PM) Narendra Modi are stable.

While speaking to reporters at the Oval Office on Thursday, US President Trump said, "He (PM Modi) largely stopped buying from Russia. And he is a friend of mine, and we speak. Prime Minister Narendra Modi is a great man. He is a friend of mine, and we speak and he wants me to go there. We will figure that out, I will go... Prime Minister Modi is a great man and I will be going," India Today reported. Later Trump expressed positively that he could visit India next year.

These comments from US President Trump came at a time when overseas investors have been hard on the Indian stock market due to delay in a trade agreement between India and the US. Top negotiators from both nations have been expressing that they are close to reaching a consensus from months, but have not agreed on all terms yet.

On Thursday, Foreign Institutional Investors (FIIs) turned out to be net sellers again and sold shares worth Rs. 3,263.21 crore. Cumulatively, FIIs have pared stake worth Rs. 6,214 crore so far in three trading days this month.

Daily digest market movers: Indian Rupee trades lower against US Dollar

• The Indian Rupee faces pressure against the US Dollar even as the latter corrects further, following the release of the US Challenger job cuts data for October.
• During the press time, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, ticks higher to near 99.80. However, it fell sharply to near 99.60 on Thursday,
• The US Challenger job cuts report showed that 153,074 employees were laid-off in October, a 183% surge from September and 175% higher seen in the same month of the previous year. This marks the highest level for any October since 2003. This has been the worst year for announced layoffs since 2009.
• The report also signaled that the adaptation of Artificial Intelligence (AI) by the private sector has led to a significant number of lay-offs in the economy, with job market conditions in the last quarter of the year becoming more unfavorable.
• Historically, the impact of the US Challenger jobs data on the US Dollar remained limited. However, its influence has accelerated in the wake of ongoing US federal shutdown, which has become the longest in history.
• Signs of cooling job market have slightly boosted expectations of another interest rate cut by the Federal Reserve (Fed) in the December policy meeting.
• The CME FedWatch tool shows that the probability of the Fed to cut interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has increased to 67% from 62% seen on Wednesday.

Technical Analysis: USD/INR holds key 20-day EMA

USD/INR edges up to near 88.75 on Friday. The pair continues to find support near the 20-day Exponential Moving Average (EMA), which trades around 88.60.

The 14-day Relative Strength Index (RSI) strives to return above 60.00. A fresh bullish momentum would emerge if the RSI (14) manages to do so.

Looking down, the August 21 low of 87.07 will act as key support for the pair. On the upside, the all-time high of 89.12 will be a key barrier.