Rupee may struggle on repeated failure at resistance, weak Asian peers
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The Indian rupee is expected to be under some pressure on Wednesday on the back of losses in Asian peers and following the currency's failure to move past an important resistance.
Non-deliverable forwards indicate the rupee will open flat-to-slightly weaker to the U.S. dollar from 82.8975 in the previous session. The domestic currency has not been successful at moving past 82.80-82.85, which traders say is a key level.
"Only a dip below this level (for USD/INR) can open up the door for a bigger move," an FX trader at a bank said.
"I have been seeing good inflows. It's just that bids (on USD/INR) always seem to appear and we hardly budge."
A few traders have pointed to the possibility that the Reserve Bank of India may be mopping up dollars in recent sessions.
Asian currencies were mostly lower on Wednesday, while the dollar index was holding just below the 104 handle. Weaker-than-expected U.S. durable and consumer confidence data did not have much of an impact on the dollar.
U.S. orders for durable goods fell 6.1% last month, according to data released on Tuesday, exceeding the 4.5% decline forecast by economists polled by Reuters.
"This is a messy piece of data and the various core elements and capital shipments figures weren’t soft," ING Bank said in a note.
"Tomorrow is the big day for the U.S., with the core PCE (Personal Consumption Expenditures) release."
The U.S. core PCE data comes in the wake of higher U.S. inflation data for January, which has prompted investors to dial back the extent and pace of interest rate cuts expected this year.
Investors have priced in 80 basis points of rate cuts this year, considerably lower than 175 bps priced in around mid-January.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.98; onshore one-month forward premium at 7 paisa ** Dollar index marginally higher at 103.87 ** Brent crude futures at $83.38 ** Ten-year U.S. note yield at 4.30% ** As per NSDL data, foreign investors sold $30.9 million of Indian shares on Feb. 26
** NSDL data shows foreign investors bought $69.1 million of Indian bonds on Feb. 26
