INR: USD/INR To Fresh 2026 Highs, Dips Under 20-day EMA Remain Supported
Spot USD/INR is biased higher in the first part of Friday trade, notably breaking above resistance around the 90.30 area, last 90.40/45, (up around 0.15% from end Wednesday levels, with no trading yesterday). This is fresh highs in the pair for 2026 and likely reaffirms the markets buy on dips strategy for USD/INR. Moves under the 20-day EMA support point in recent months, often instigated by suspected RBI intervention episodes, have ultimately proven to be buying opportunities. This support point is current around 90.08. Upside focus is likely to rest on late 2025 highs at 91.05/10, although RBI intervention may emerge before such a test.
- Early equity trends are better for the Nifty and Sensex so far today, but we have underperformed so far in 2026, with offshore investors also remaining net sellers.
- Yesterday's Dec trade data showed a trade deficit close to forecasts (-$25bn), but export growth slowed sharply. Exports to the US fell sharply back into negative y/y territory, some offset came from continued strength in exports to China (+67.4%y/y). Still, the lack of clarity around a US-India trade deal continues to cast a shadow over Indian assets, including INR.
- Local media reports positive progress on this front though: "India and the U.S. are very close to a trade agreement and it would materialse when both sides are ready, Commerce Secretary Rajesh Agrawal said Thursday." (see this link for more details).
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US TSYS: Bonds Weaker on Equity Rebound, TYH6 Below Key Tech Level
US bond futures headed lower in the afternoon as equities across the region delivered strong gains. The 10-Yr is down -04 to 112-12+. The losses take TYH6 back below the 100-day EMA of 112-14. Downside resistance now is the 200-day EMA of 111-30.
Cash is weak also with yields +1.3bps to +2.8bps higher across the curve.
- The 2-Yr is up +1.3bps to 3.502%
- The 5-Yr is up +1.8bps to 3.716%
- The 10-yr is up +2.3bps to 4.17%
- The 30-Yr is up +2.8bps to 4.844%
Fed Speakers Wednesday will be watched carefully by markets with Waller, Williams and Bostic speaking with investors also looking ahead to Thursday's November CPI release.
Geopolitics could have a say in the outlook for risk sentiment as the US President orders the blockade of sanctioned oil tankers in Venezuela as US equity futures trend downwards.
Tonight sees a US$69bn 17-week bill auction and a US$13bn 20-Yr re-opening.
ASIA STOCKS: Chinese AI Chip Co. Debut Gives Tech Stocks a Boost
Asia's equity markets are higher today with China's bourses up as tech stocks rebounded and hopes of further interest rate cuts in the US prevail. The NIKKEI was up as it awaits the decision this week by the BOJ on interest rates with it widely expected that rates will rise by 25bps. China's bourses were buoyed by the market debut of AI chipmaker MetaX Integrated Circuits on the Shanghai exchange. MetaX shares jumped by over 600% on their first day of trading, following a similar stellar performance by rival Moore Threads earlier in the month. This highlights investor enthusiasm for homegrown Chinese technology companies amid geopolitical tensions with the US. The optimism for the tech sector in China spilled over into Korea with key tech stocks in Korea up between 1-3%.
- The NIKKEI feels like it is treading water ahead of the BOJ but remains up a mere +0.08% today, whilst the KOSPI found real support for tech stocks and is up +0.80%.
- China's major bourses were all up between +0.20% + 0.60% with the CSI 300 the outperformer. The gains for the CSI 300 to 4,523 sees it at the mid-point of the topside resistance from the 50-day EMA of 4,550 and the downside resistance from the 100-day EMA at 4,450.
- India's NIFTY 50 has opened flat after two days of falls as investors look for signals for US interest rates whilst commodity prices remain pressured.
- SE Asia's bourses were mixed with the Jakarta Comp up +0.20% and the FTSE Malay KLCI down -0.50%.
FOREX: USD - BBDXY Pushes Higher In Asia
The BBDXY has had a range today of 1204.77 - 1206.60 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD broke below 1204 in reaction to the US data overnight, but it could not follow through and has recouped all of yesterday's losses and more. On the day I am a little confused, perhaps some patience is needed for a look back towards the 1208-110 area and above here the more important 1213-1216 area where sellers should remerge initially. Can this 1204 area provide some support again if not a move below here would target 1198-1200.
- EUR/USD - Asian range 1.1737-1.1752, Asia is currently trading {EURUSD Curncy}. The pair did not like it back up towards 1.1800 and very quickly rejected the move higher. On the day, first support is toward 1.1680-1710 initially, looking for the pair to consolidate before finding a base to attempt another move higher again.
- GBP/USD - Asian range 1.3407-1.3427, Asia is currently dealing around {GBPUSD Curncy}. The pair stalled back toward the 1.3450 level overnight. On the day GBP has initial support around the 1.3340-1.3370 area, if this does not hold look for a pullback to the more important 1.3260/90 area. I continue to watch for signs of GBP potentially topping out, which for the moment looks a lost cause.
- Cross asset : SPX -0.05%, Gold $4325, US 10-Year 4.16%, BBDXY 1205, Crude Oil $55.97
- Data/Events : Germany IFO, Spain Total Mortgage Lending, EZ CPI/Labour Costs YoY
Fig 1: EUR/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
