• USD/INR remains inside a tight range, renews intraday low of late.
• Expectations of slower Indian growth, hawkish comments from Fed Chair Powell keep buyers hopeful.
• China-linked market optimism battles with downbeat activity data from the dragon nation.
• US ADP Employment Change, second readings of US Q3 GDP will also be important for clear directions.

USD/INR aptly portrays the pre-data anxiety around 81.60 during early Wednesday as traders await the key catalysts from India and the US. Also likely to have challenged the USD/INR moves could be the recently mixed signals from China.

Downbeat China activity numbers jostled with the hopes of easing Covid woes to challenge traders in Asia. That said, China’s officials NBS Manufacturing PMI dropped to 48.0 versus 49.2 expected and 49.0 prior. Further details mention that the Non-Manufacturing PMI also slumped to 46.7 from 48.7 prior and 51.7 expected.

Elsewhere, Beijing announced multiple measures to ease the strict lockdown in the key areas after witnessing a retreat in the daily Covid infections from a record high. Even so, the world’s second-largest economy kept its Zero-Covid policy intact. Bloomberg reported the reopening of some city buildings in the greater Zhengzhou region, the home of a key iPhone plant. Earlier on Tuesday, the news broke that China's Guangdong province will allow the close contacts of Covid cases to quarantine at home.

On a different page, firmer oil prices and robust foreign inflows also seem to restrict the USD/INR moves.

WTI crude oil defends the latest rebound from the yearly low while printing mild gains around $79.00 by the press time. India’s reliance on energy imports and a record Current Account Deficit (CAD) makes the Indian Rupee (INR) susceptible to Oil price moves.

Alternatively, Reuters cited an optimistic growth outlook to mark the heavy foreign fund inflow and favor the USD/INR bears. “India's robust growth outlook has prompted a revival in foreigners returning to domestic equities. So far this month, overseas investors have bought more than $4 billion of Indian shares,” stated the news.

Also, the market’s sluggish moves, as signaled by the inactive S&P 500 Futures and mixed moves in Asia, not to forget sticky US Treasury bond yields, challenge USD/INR momentum traders.

Moving on, India’s Gross Domestic Product (GDP) for the July-September quarter is likely to be the key for the USD/INR pair traders ahead of Fed Chair Jerome Powell’s speech. Reuters poll suggests that the economy likely returned to a more normal 6.2% annual growth rate in July-September after double-digit expansion in the previous quarter.

On the other hand, hawkish expectations from Fed Chair Powell appear as a hurdle for the quote. Additionally important is an early signal for Friday’s United States Nonfarm Payrolls (NFP), namely the ADP Employment Change for November, as well as the second readings of the United States Gross Domestic Product (GDP) for the third quarter (Q3). Forecasts suggest that the US ADP Employment Change for November is expected to arrive at 200K versus 239K prior while the US Q3 GDP could confirm the flash forecasts of 2.6% Annualized growth.

Technical analysis

Gradual unwinding long positions from the 50-DMA hurdle, currently around 81.90, favor USD/INR bears.