• USD/INR takes the bids to refresh all-time high, up for third consecutive day.
• Oil prices, chatters of RBI intervention and growth fears amplify bearish bias over INR.
• News concerning China, Russia joins strong yields to also underpin USD strength.

With the US dollar bulls cheering the broad risk-off mood, as well as the firmer Treasury yields, the USD/INR renews the historical top above 77.00 during Monday’s Asian session. That said, the Indian rupee (INR) pair takes the bids to refresh its all-time high with a 77.43 level at the latest.

The escalated covid fears in China, as well as the Group of Seven (G7) nations’ sanctions on Russia, appear as the key challenges to the global market sentiment of late. On the same line are growing inflation fears and resulting concerns surrounding growth, especially in Asian nations where China’s covid conditions add to the toll.

Furthermore, Friday’s US jobs report for April and the following comments from Fed speakers fail to justify Fed Chair Jerome Powell’s rejection of 75 basis points (bps) of a rate hike. The US Nonfarm Payrolls (NFP) reprinted the 428K figures, if compared to the revised figures for March, by surpassing the 391K forecasts. On the same line, the Unemployment Rate also remained intact at 3.6%.

Following the data, Minneapolis Fed President and FOMC member Neel Kashkari said in a blog post on Medium, “Given that long-term real rates have the greatest influence on the demand for credit, financial conditions are already nearly back to neutral levels.”  The policymaker also said his assessment of the nominal neutral rate of interest is still that it is around 2.0%. It’s worth noting that the President of the Federal Reserve Bank of St. Louis James Bullard reiterated his bullish bias and pushed the Fed towards a 3.5% rate.

On a different page, speculations over the state-run banks’ dollar sales and the RBI’s intervention also fuel the USD/INR prices.

Amid these plays, the US 10-year Treasury yields to the fresh high since late 2018, up by two basis points (bps) near 3.15% by the press time, while also pushing the US Dollar Index (DXY) to poke the 20-year high around 104.00 at the latest.

Moving on, pessimism in Asia joins the firmer USD to keep the USD/INR prices pressured towards a fresh record high. However, Wednesday’s inflation numbers will be important to watch for fresh impulse.

Technical analysis

A clear upside break of the two-month-old descending trend line, around 77.05 by the press time, directs USD/INR towards the 78.00 threshold.