INR update: Less dovish FED, slowing global manufacturing, Less volatile oil gives no clear direction for Rupee

The FED was clearly less dovish in ruling out any reason for a rate cut in 2019 which was negative for risk sentiments, as markets were expecting incremental dovish statements as a counter to slowing global growth. With US manufacturing ISM slowing down below expectations accompanied with less than consensus China PMIs, global manufacturing clearly seems to be decelerating. The next critical pieces of information would be EU inflation, NFP and services ISM tomorrow.

USDINR 1m NDF is trading 6p right which is less than the deviation on Tuesday. Oil continues to hover around 72 levels with the upward momentum waning after Trump’s tweets last weekend. USDINR seems to be driven by some inflow which drove it lower on Tuesday. Today’s price action suggests some selling as well. Given oil at 72 and EM currencies like USDKRW and USDCNH at elevated levels, I would have expected USDINR to move higher. CMP 69.56, Range 69.38-69.90.