• USDINR picks up bids to renew intraday high, up for the third consecutive day.
• Risk aversion, firmer yields underpin US Dollar rebound ahead of the key data.
• Wider trader deficit in India, chatters over RBI’s softer rate hikes weigh on Indian Rupee.

USDINR refreshes an intraday high around 81.55 during a three-day winning streak early Wednesday morning in Europe.

In doing so, the Indian Rupee (INR) pair cheers the market’s risk-off mood, as well as the latest rebound in the US Treasury yields, which favored the US Dollar ahead of the US Retail Sales for October, expected 1.0% versus 0.0% prior.

That said, the US Dollar Index (DXY) prints mild gains around 106.70 as members of the North Atlantic Treaty Organization (NATO) and the Group of Seven (G7) showed readiness to be in close contact to decide any possible reaction to the Russian-made rockets fell in Poland. Also weighing on the risk appetite is a jump in China’s Covid numbers to the highest levels since April 2021.

Elsewhere, a widening trade deficit in India and the previously downgraded economic forecast weigh on the INR. “India's merchandise trade deficit in October widened to $26.91 billion from $25.71 billion in the previous month,” a Reuters calculation based on export and import data released by the government on Tuesday showed.

Previously, Moody’s cut India’s Gross Domestic Product (GDP) forecast for the current and the next Financial Year (FY) to 7.0% and 7.7% in that order. It should be noted that the Reserve Bank of India (RBI) expects India to grow by 7.0% in 2022. Additionally, recent softness in the Indian Retail Inflation numbers also allowed USDINR buyers to keep the reins. “India's annual retail inflation eased to 6.77% last month, helped by a slower rise in food prices, data showed on Monday,” mentioned Reuters.

It should be noted, however, that softer US data and talks of the US Federal Reserve’s (Fed) pivot challenge the USDINR bulls amid sluggish markets.

While portraying the sentiment, Wall Street closed with smaller gains than the early-day moves while the US 10-year Treasury yields struggle at a six-week low. That said, the S&P 500 Futures retreated from the monthly high.

Looking forward, headlines for the Coronavirus and Poland are likely to gain major attention but the US Retail Sales for October, expected 1.0% versus 0.0% prior, will be more important for clear directions.

Technical analysis

A clear upside break of the two-week-old resistance line, now support around 80.90, keeps the USDINR buyers hopeful. However, the 50-DMA challenge the pair’s immediate advances.