• USD/INR prints three-day uptrend at the highest level since early July.
• US Dollar remains sidelined after refreshing three-week high even as Fitch Ratings cut US credit rating to AA+ from AAA.
• Market chatters about US rating downgrade, mixed US data and Fed talks prod US Dollar ears.
• Risk aversion in Asia, light calendar in India allow Rupee to remain depressed ahead of US ADP Employment Change.

USD/INR clings to mild gains around 82.40 as it prints a three-day winning streak amid early Wednesday morning in Europe. In doing so, the Indian Rupee (INR) pair justifies the risk-off mood in the Asia-Pacific region, as well as the US Dollar’s hesitance in pushing back the bullish bias despite the US credit rating downgrade.

Late on Tuesday, global credit rating agency Fitch Ratings downgraded the US credit rating from AAA to AA+ by citing the debt crisis as the key catalyst. Following the announcement, the White House and US Treasury Secretary Janet Yellen rushed to criticize the move and defend the US Dollar by terming the move as inappropriate. On the same line, the recent market chatters, mainly from big bankers, suggest that such a rating cut is likely to have a minor negative impact on the US fundamentals and hence recently challenge the risk-off mood.

Further, the mixed US data and the Fed talks also put a floor under the US Dollar and propel the USD/INR price. On Tuesday, US ISM Manufacturing PMI for July improves to 46.4 from 46.0 prior, versus 46.8 expected. Further details unveil that ISM Manufacturing Employment Index slumped to 44.4 from 48.0 expected and 48.1 prior whereas the ISM Manufacturing Price Paid for the said month rose to 42.6 from 41.8, compared to 42.8 market forecasts. Elsewhere, the US JOLT Job Openings for June also eased to 9.582M compared to 9.62M expected and 9.616M previous readings (revised).  On the other hand, Atlanta Federal Reserve Bank President Raphael Bostic crossed wires via Reuters while ruling out the need for a September rate hike while warning of the risk of over-tightening. Before him, Chicago Federal Reserve Bank President Austan Goolsbee sought more proof of inflation easing to support the end of rate hikes.

Amid these plays, stocks in the Asia-Pacific zone trade mixed with Japan’s Nikkei falling more than 1.5% while Chinese equities also print the red. However, shares in Australia and New Zealand print mild gains by the press time and prod the bears. It should be noted that Indian equities retreated in the last few days after refreshing the record top in July.

In addition to the risk-off mood and sturdy US Dollar, upbeat Oil price also propel the USD/INR price due to India’s reliance on energy imports. That said, WTI crude oil rises to a fresh high since April, up 0.10% intraday near $82.20 by the press time.

Moving on, the risk catalysts and the US ADP Employment Change for July, expected 189K versus 497K prior, will be crucial for intraday directions of the USD/INR pair amid a light calendar in India.

Technical analysis

A successful break of the 200-SMA on the daily chart, around 82.15 by the press time, directs USD/INR buyers toward a downward-sloping resistance line from late May, close to 82.65 at the latest.