• USD/INR is attempting to establish above 80.00 on soured market mood.
• The Fed is expected to announce a third consecutive 75 bps rate hike further.
• India’s GDP is expected to have grown in a range of 13-16.2% in the second quarter.

The USD/INR pair has opened above the psychological resistance of 80.00 as signals of the continuation of restrictive policy by the Federal Reserve (Fed) spiraled negative market sentiment. The asset is preparing for a fresh buying leg and is expected to recapture its all-time highs at 80.21.

An adaptation of the restrictive approach by Fed chair Jerome Powell at the Jackson Hole Economic Symposium while discussing interest rates cleared one thing that investors need to comprise with growth rates and employment generation for a period of time. Bringing price stability and achieving an optimal inflation rate near 2% will demand sacrifices in growth projections and job creation. However, the impact will be for the greater good and for a prolonged period.

Now, investors should brace for a third consecutive 75 basis points (bps) rate hike by the Fed in its September monetary policy meeting.

Meanwhile, oil prices have resumed their upside journey and have climbed to near $94.00. It seems that investors are betting over supply cuts by OPEC rather than a decline in global growth projections. It is worth noting that India is a leading importer of oil and a rebound in oil prices may impact the Indian fiscal balance sheet.

Looking at the data front, the US Nonfarm Payrolls (NFP) will remain in limelight. The economic data is expected to trim dramatically to 290k against the prior release of 528k. While in India, investors’ entire focus will be on Gross Domestic Product (GDP) data for the second quarter. The Indian economy is expected to have grown in a range of 13-16.2% in the second quarter of CY2022.