Stock Market Today: Asian Stocks Dip as Wall Street Momentum Slows with Cooling Trump Trade

Stocks

Summary:

Asian stocks declined Wednesday as Wall Street's post-Trump election rally cooled, with U.S. futures down and Treasury yields rising. Bitcoin hit a new high before easing, while oil prices fluctuated.

Asian stocks on Wednesday followed Wall Street lower as momentum cooled for the torrid “Trump trade” that swept U.S. markets following Donald Trump’s presidential victory.

Japan’s benchmark Nikkei 225 slipped 1.1% in morning trading to 38,953.44, as wholesale inflation reached its highest level since July of last year. The corporate goods price index, which measures the price changes of goods traded in the corporate sector, rose 3.4% in October year-over-year, according to Bank of Japan data. The increase was partly attributed to the decline of the Japanese yen against the U.S. dollar.

South Korea’s Kospi lost 1.5% to 2,445.90. Samsung Electronics shares fell by 2.1% in Wednesday trading, reaching their lowest level in over four years.

Hong Kong’s Hang Seng dropped for a fourth day, declining 0.5% to 19,754.92. The Shanghai Composite gained 0.2% to 3,426.98.

Australia’s S&P/ASX 200 fell nearly 1.0% to 8,178.00.

U.S. futures dropped while oil prices were higher.

On Tuesday, the S&P 500 slipped 0.3% to 5,983.99, a day after setting its latest all-time high. The Dow Jones Industrial Average dropped 0.9% to 43,910.98, and the Nasdaq composite fell 0.1% to 19,281.40.

Stocks had been broadly rising since last week on expectations that Trump’s preference for lower tax rates and other policies may mean faster economic growth, as well as bigger U.S. government debt and higher inflation. Some areas of the market rocketed on particularly high-grade fuel, such as smaller U.S. stocks seen as benefiting the most from Trump’s “America First” ideas.

They gave back some of their big gains Tuesday, and the Russell 2000 index of smaller companies fell a market-leading 1.8%. Even Tesla, which is run by Trump’s ally Elon Musk, sank. It dropped 6.1% for its first loss since before Election Day.

A jump in Treasury yields also added pressure on the stock market, as trading of U.S. government bonds resumed following Monday’s Veterans Day holiday. The yield on the 10-year Treasury jumped to 4.42% on Tuesday from 4.31% late Friday, which is a notable move for the bond market.

Treasury yields have been climbing sharply since September, in large part because the U.S. economy has remained much more resilient than feared. The hope is that it can continue to stay solid as the Federal Reserve continues to cut interest rates in order to keep the job market humming, now that it’s helped get inflation nearly down to its 2% target.

Some of the rise in yields has also been because of Trump. He talks up tariffs and other policies that economists say could drive inflation and the U.S. government’s debt higher. That puts upward pressure on Treasury yields and could hinder the Fed’s plans to cut interest rates. While lower rates can boost the economy, they can also give inflation more fuel.

The next update on inflation will arrive Wednesday, when the U.S. government will give the latest reading on prices that U.S. consumers are paying across the country. Economists expect it to show inflation accelerated to 2.6% in October from 2.4% the month before. But they’re also looking for underlying inflation trends, which ignore prices for groceries and fuel that can zigzag sharply from one month to another, to stay steady at 3.3%.

In the crypto market, bitcoin soared to another record before pulling back. Trump has embraced cryptocurrencies generally and pledged to make his country the crypto capital of the world. Bitcoin got as high as $89,995, according to CoinDesk, before dipping back toward $89,500. It started the year below $43,000.

In energy trading, benchmark U.S. crude gained 26 cents to $68.38 a barrel. Brent crude, the international standard, fell 31 cents to $72.20 a barrel.

In currency trading, the U.S. dollar edged up to 154.75 Japanese yen from 154.51 yen. The euro cost $1.0623, down from $1.0625.

Source: AP

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Owen Li

Economic

Stocks

Is Shopify stock a buy?

The e-commerce platform has had six straight quarters of 25% year-over-year revenue growth.

Shopify (NYSE: SHOP) stock was the biggest movers on Tuesday, skyrocketing more than 25% on the day to about $113 per share.

The e-commerce platform generated $2.16 billion in revenue in the quarter, up 26% year-over-year and ahead of analysts’ estimates of $2.11 billion. It was the sixth straight quarter with greater than 25% revenue growth.

Net income rose 15% to $828 million, but the preferred non-GAAP adjusted earnings spiked 99% to $344 million, or 64 cents per share. That crushed estimates of 27 cents per share. The adjusted earnings exclude the impact of equity investments in third parties, which are not relevant to the fundamentals of the business or indicative of operating earnings.

With today’s meteoric rise, Shopify stock is up about 53% year-to-date to around $113 per share.

GMV jumps 24%

The strong Q3 earnings were driven by robust activity on its shopping platform, combined with sound expense management.

Specifically, Shopify saw a 24% rise in gross merchandise volume, or GMV, to $69.7 billion, which beat estimates of $67.5 billion. The GMV represents the dollar value of orders facilitated through the Shopify platform. Further, its monthly recurring revenue (MRR), which is the number of merchants multiplied by the average monthly subscription plan fee, jumped 28% year-over-year to $175 million.

Overall, Shopify’s subscription solutions revenue climbed 25% to $610 million in the quarter while its merchant solutions arm saw revenue increase 26% to $1.55 billion, which beat estimates of $1.52 billion.

In addition, Shopify was able to keep expenses in check, as they rose just 7% compared to the third quarter of 2023, with general and administrative expenses actually falling 17% to $114 million.

This enabled Shopify to boost its free cash flow by 52% to $421 million, as it gained in each of the first three quarters this year. The free cash flow margin rose to 19%, from 16% in the same quarter a year ago. This is an important measure as it allows to invest in both operations and future growth.

“Q3 was outstanding, further establishing Shopify as a leader in powering commerce anywhere, anytime. Our unified commerce platform is becoming the go-to choice for merchants of all sizes,” Harley Finkelstein, president of Shopify, said. “As the busiest shopping season of the year for our merchants’ approaches, they trust Shopify to provide the tools, unmatched speed, and reliability to maximize their success.”

Is Shopify stock a good buy?

Investors were not only impressed by the strong growth; they were also heartened by Shopify’s Q4 outlook.

The firm anticipates another quarter of robust revenue growth, targeting a mid-to-high-twenties percentage rate spike in revenue in Q4.

Gross profit, which climbed 24% to $1.12 billion last quarter, is expected to see a similar growth rate in Q4 while operating expenses, as a percentage of revenue, are targeted at 32% to 33%. This would be lower than the approximately 38% rate last quarter.

Shopify earned some price target upgrades after Q3 results, including Evercore, which boosted it by $45 to $125 per share. In addition, Roth MKM boosted the target to $135 per share. That would represent a 13% to 22% increase in the share price.

But prior to the Q3 earnings release, Shopify had a median target of $80 per share, which would suggest a 29% drop.

The concern is the P/E ratio, which shot up to 98, with a forward P/E of 68. While it has enjoyed robust and sustained growth, that seems a bit too high and should be monitored.

Source: FXSTREET

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Pepperstone

Economic

WHERE WE STAND

Another day, yesterday, of relatively broad-based USD gains, as the ‘Trump Trade’ rolled on in the G10 FX arena, with both US growth and inflation expectations continuing to re-rate higher.

Momentum, as it has done all year, is also playing a pivotal role here, with fresh USD highs bringing more bulls to the party, maintaining something of a virtuous cycle for the buck. As a result of this, yesterday saw the DXY rally north of the 106 handle, while Bloomberg’s broader proprietary USD index, which also includes a handful of EMs, traded to its best level since 2022.

I still see it as tough to bet against the buck at this stage, with the idea of ‘US exceptionalism’ only gathering strength amid expectations that fiscal stimulus in the first 100 days of the second Trump Administration will provide a further fillip to growth. A cool CPI print today could present a ‘bump in the road’ for the greenback, though I’d argue that Friday’s retail sales print is more pivotal, given the importance of solid consumer spending in ensuring that broader economic growth remains resilient.

While US macro news is looking increasingly positive, the same cannot be said of the eurozone. Political uncertainty is the latest factor to blight the common currency, which we can add to a rather long ‘laundry list’ of other downside risks, including – the potential for inflation to undershoot the ECB’s target; ongoing geopolitical events in Ukraine and the Middle East; the lack of any notable recovery in China; and, the threat of Trump slapping tariffs on the bloc. I’m sure I’ve missed some from that list, such is its length!

Anyway, the political events in question of course come from Germany, where a ‘snap’ election will now be held next February. I feel ‘snap’ may be stretching it a bit, but that’s still 7 months earlier than had been originally planned. Of course, the German economy was hardly in the rudest of health before this dollop of political uncertainty, which is only likely to further depress near-term growth prospects, as evidenced by yesterday’s ZEW survey, where the expectations metric fell to a paltry 7.4,

Calls for EUR/USD to trade at parity seem to be growing louder, and understandably so, though I feel such expectations are a little punchy for now. Still, I’d be happy selling any EUR rallies for the time being, as we grind ever closer to the 1.05 mark, below the fresh 12-month lows printed yesterday.

Outside of FX, it was moves in the Treasury complex that caught the eye, with a rather brutal sell-off taking hold across the curve. The belly underperformed, with 5-10 year yields trading as much as 15bp higher, as benchmark 10s rose to 4.45% once more, as the curve in its entirety bear steepened. Treasuries do seem rather cheap here, though, with a 4.35% 2-year yield, and 4.45% 10-year yield, appealing given continued disinflation, and the Fed continuing to take policy back to a more neutral setting.

Meanwhile, despite the ‘Trump Trade’ being evident in both FX & FI, the same cannot be said of the equity space. The S&P 500 was unable to make it 52 record closes for the year, ending the day around 0.3% lower. Furthermore, the rotation out of tech, and into value, which had dominated Monday’s trade rather ran out of steam, with the Russell 2000 notably underperforming on the day.

Finally, crude traded marginally firmer, with Brent reclaiming $72bbl, despite OPEC cutting their global oil demand forecasts for the fourth month running. This could well be a case of demand expectations already being so pessimistic, that there is little more bad news to be priced in.

Still, with 2024 consumption estimates down by almost a fifth since July, China still in the doldrums, and potential supply hikes coming at the start of December, I struggle to find a bull case for crude here. That said, with tensions in the Middle East having high potential to flare up in the ‘blink of an eye’, short crude positions warrant caution, and I’d certainly not be keen on running any weekend risk.

LOOK AHEAD

It’s ‘CPI Day’ today, though I must admit that the monthly US inflation figures are not exactly the huge market-mover that they were earlier in the cycle. Chiefly, this owes to the FOMC having obtained sufficient confidence in inflation moving towards the 2% target, on a sustainable basis, over the medium-term, and subsequently having pivoted to make labour market developments the key driver of policy shifts going forward.

Nevertheless, the pace of headline inflation is seen quickening in October, to 2.6% YoY, up 0.2pp from September’s rate, though the bulk of this increase will come as a result of higher energy prices. Core inflation, consequently, is seen holding steady at 3.3% YoY, and 0.3% MoM. While the figures might cause some knee-jerk intraday vol, I can’t imagine today’s CPI print materially shifting the Fed policy outlook, with a 25bp December cut remaining my base case.

Away from CPI, today’s docket is a relatively quiet one. BoE MPC member Mann will be speaking, likely to explain her dissent in favour of holding rates steady at last week’s policy meeting. A handful of FOMC speakers are also due, though nobody is especially likely to deviate from the now well-established ‘data dependent’ script.

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ACY

Economic

Forex

The euro has recently faced significant pressure, making it the weakest among G10 currencies this week. This decline has been particularly marked against commodity currencies like the Norwegian krone, Australian dollar, and New Zealand dollar, pushing the EUR/USD pair close to a crucial support level around 1.0700. Several macroeconomic factors are weighing on the euro’s performance, including anticipated US tariffs, political instability in Germany, and divergent monetary policies between the European Central Bank (ECB) and the US Federal Reserve.

Currency Strength (EUR in Red)

US Tariffs and Economic Outlook

The anticipated policy shift under the Trump administration suggests that new tariffs on EU imports could materialize in the first half of the upcoming year. Economists are concerned that these tariffs may disrupt eurozone trade flows, potentially dragging down GDP growth by approximately 0.4 percentage points. While retaliatory tariffs from the eurozone could apply upward pressure on consumer prices, this may also strain the region’s economic growth trajectory.

Furthermore, the ECB is likely to continue reducing the deposit rate closer to 2.00% to stimulate the European economy. This outlook contrasts with the US Federal Reserve's more cautious approach, where expected rate cuts are projected to slow, especially with inflationary risks linked to Trump’s agenda. The interest rate differential has already widened, with US yields increasing more than those in the eurozone. Consequently, expectations for higher US interest rates and slower ECB cuts add further pressure to the euro, potentially driving the EUR/USD rate closer to the 1.0000 - 1.0500 range.

ECB Rate Forecasted to Cut 25bp on 12/12/2024

Euro Under Pressure Amid US Tariffs and German Political Shifts_2

Germany’s Political Landscape and Economic Implications

Adding to the euro’s challenges, Germany is experiencing heightened political uncertainty following the collapse of its coalition government. The breakdown, triggered by the dismissal of the finance minister, leaves the SPD party aiming to govern temporarily with the Greens until a confidence vote in mid-January. If this motion fails, as expected, a snap election could be called by March 2025, which might bring about a shift in Germany’s political spectrum.

Current polls indicate growing support for the centre-right CDU/CSU alliance, along with populist movements on both the right and left. If the CDU/CSU is unable to secure a majority, coalition negotiations could lead to further political gridlock, complicating Germany’s response to economic challenges. This uncertainty, if prolonged, may affect the euro’s stability, especially with a potential shift in policies that could impact trade, energy, and fiscal support for the German economy.

Energy Prices and Broader Economic Impact

The eurozone could potentially benefit from lower energy prices, which have recently shown a downward trend. If oil prices fall further, it could improve Europe’s trade balance and support consumer spending within the region. However, with uncertainty from impending US tariffs and possible political shifts in Germany, the benefits of lower energy costs might be muted, especially if tariffs stymie growth.

West Texas Oil Prices H4

Outlook for the Euro

Overall, the euro’s near-term prospects appear challenging, with the combined effect of US tariffs, Germany’s political instability, and diverging monetary policies likely to sustain downward pressure. While a shorter period of political uncertainty in Germany could mitigate some risks, the euro may still test lower thresholds in the EUR/USD range, particularly if US tariffs materialize and Germany’s government struggles to stabilize.

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Justin

Economic

(Nov 13): Billionaire Elon Musk and entrepreneur Vivek Ramaswamy will lead a new Department of Government Efficiency tasked to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies”, US President-elect Donald Trump announced on Tuesday.

On the campaign trail, Trump said the government efficiency effort would develop a plan to eliminate “fraud and improper payments”, conducting a “complete financial and performance audit” of the federal government. On Tuesday, Trump said the panel would partner with the White House’s Office of Management and Budget and said their work will conclude no later than July 4, 2026 — the nation’s 250th anniversary.

The structure may allow Musk to avoid resigning from his companies including Tesla Inc, the world’s largest electric vehicle manufacturer, and SpaceX, which dominates the worldwide rocket launch market — and federal conflict-of-interest rules that could have mandated divestiture.

But it’s not clear what the size or structure will be, or how Musk and Ramaswamy will drive the dramatic overhaul of the government they have promised. The effort, which abbreviates to 'Doge', is a play on one of Musk’s favorite internet memes, and Musk has been an advocate of a the digital token Dogecoin. In a post to his social media network X, Musk suggested the government efficiency panel would offer merch.

Musk predicted he could cut at least US$2 trillion (RM8.90 trillion) from the US federal budget at Trump’s rally last month at Madison Square Garden, though that would exceed the amount Congress spends annually on government agency operations, including defense. It would likely require making significant cuts to popular entitlement programs such as Social Security, Medicare, Medicaid and veterans’ benefits.

Last fiscal year, the government spent more than US$6.75 trillion, with more than US$5.3 trillion of that coming from Social Security, healthcare, defence and veterans’ benefits — all of which are politically fraught and notoriously difficult to convince Congress to cut — as well as interest on the debt.

“This will send shockwaves through the system, and anyone involved in Government waste, which is a lot of people,” Musk said on Tuesday in a statement provided by the Trump transition effort.

Musk, 53, saw his net worth top US$300 billion shortly after the election — the first time he’d surpassed that mark in almost three years. He is the only person to ever have a fortune in excess of US$300 billion, according to Bloomberg’s wealth index. Tesla shares, which were trading about 1.5% lower in the after-hours session before Trump’s announcement, pared losses slightly after the news.

Musk is likely to serve as a special government employee, the formal designation for individuals outside of government brought in for short periods to lend their expertise.Ramaswamy, an Ohio businessman, mounted a bid for the GOP nomination himself but largely echoed and amplified Trump’s position.

Prominent allies

During his run, Ramaswamy, 39, was loathe to criticise Trump, praising the Republican standard-bearer and endorsing many of the policies the incoming president has espoused, including scaling back the size of the federal government and pulling back from foreign alliances.

Ramaswamy also backed ending US aid to Ukraine, called at one point for a wall along the US-Canada border to halt the spread of fentanyl and has been an advocate for the cryptocurrency industry, calling for rolling back regulations and implementing drastic cuts to the Securities and Exchange Commission.

His staunch support for Trump, fuelled by some breakout moments in primary debates that saw him attack some of the president-elect’s top rivals for the nomination, helped him build his standing among conservative voters. Ramaswamy would go on to be a fervent surrogate for the president-elect, earning Trump’s praise.

While Trump ruled him out as a running mate, he weighed him as a possible Cabinet pick as early as March, according to people familiar with the matter at the time.

On the trail, Trump praised Ramaswamy as “smart”, and expressed hope that he would be part of a second-term administration.

“We can put him in charge of one of these big monsters, and he will do a better job than anybody you can think of,” Trump said at a campaign rally in October.

Source: Theedgemarkets

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FOREX.com

Economic

Forex

Overview

Wednesday’s US consumer price inflation report could be the catalyst to spark an extended Fed pause, likely fuelling further gains in the US dollar against other major currencies.

With the economy powering ahead, even before the prospect of highly expansionary fiscal policy from the Trump administration, further signs of sticky inflationary pressures could push markets to flirt with the idea that the next Fed move may be a hike. As unlikely as that sounds, it’s something traders need to be prepared for as they double down on Trump trades, underpinned by expectations for a string of rate cuts ahead.

US inflation fight may not be over

The US economy simply won’t quit, defying expectations that higher interest rates would slow it down meaningfully. Instead, growth is running well above perceived potential, pointing to the risk of lower unemployment and higher inflation.

The Citi Economic Surprise Index has surged to multi-month highs, as shown below, with most data releases now topping forecasts despite much higher market expectations. Tellingly, US inflation surprises are now moderating after undershooting earlier this year. Longer-term market-based inflation expectations are also at multi-month highs, reflecting concerns the Fed may not be able—or willing—to bring inflation back to its mandated 2% target.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_1

US core consumer price inflation has risen 0.3% in each of the past two months, with another 0.3% print forecast later today. Annualized on a one- and three-month basis, that's nearly double the Fed’s 2% target. While it’s not the Fed's preferred measure, 0.3% gains simply don’t get the job done.

Fed rate cut pricing evaporating fast

With inflation concerns rising, expectations for Fed rate cuts by the end of 2025 are evaporating faster than a puddle in Death Valley during summer. When the Fed started its easing cycle in September, markets anticipated nearly eight 25bps cuts between November 2024 and December 2025. Now, that’s down to three. The trend is obvious, and it's powering US dollar strength.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_2

and that’s fuelling US dollar strength

The next chart shows the rolling 10-day correlation between the US dollar index (DXY) and US interest rates across the yield curve. The strongest relationship has been with short-term rates, most influenced by monetary policy expectations.

So, it’s no surprise that on the same day US two-year Treasury yields hit fresh post-election highs, the DXY surged to multi-year highs.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_3

Contrary to some headlines, the dollar move is more about the Fed than Trump’s policies directly. Trump’s policies influence what the Fed may do, but even before the election, it was clear the US economy didn’t need a deep rate-cutting cycle to keep unemployment low.

DXY breaks nemesis downtrend

It’s not just fundamentals contributing to the bullish US dollar story. Technicals are also working in its favour with the DXY breaking above a long-running downtrend that has sparked multiple bearish reversals in the past. The weekly chart tells the story.

If we don’t see a meaningful reversal back below the trendline in the coming days, which would likely require a significant US inflation undershoot or retail sales data on Friday to unravel from a fundamental perspective, it may embolden traders to buy the break looking for a continuation of the bullish move. Momentum is to the upside, with common indicators such as RSI (14) not yet overbought on the weekly timeframe.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_4

As the two largest constituents in the DXY, the technical picture for EUR/USD and USD/JPY is arguably more important than the dollar index given relative volumes traded in both pairs.

EUR/USD sick and unloved, understandably

EUR/USD looks like it's ready for last rites on the daily timeframe, briefly sinking to multi-year lows on Tuesday before bouncing into the close. With Europe’s largest economy in political turmoil and no obvious plan to boost activity other than cutting interest rates, only an undershoot in the US inflation report may prevent a deeper slide for the euro.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_5

A break and close below 1.0602 would generate a bearish setup, allowing shorts to be established with a stop above for protection. Potential downside targets include 1.0517 and 1.0448—two prior market troughs. Momentum is with the bears, and RSI (14) is not yet oversold on the daily, reinforcing the bias to sell squeezes and downside breaks in the near term.

Honestly, the only thing the euro has going for it right now is just how unloved it is, creating the potential for short-term squeezes. But without fundamentals underpinning them, these rallies are likely to be brief.

USD/JPY bulls regain ascendancy

When writing the USD/JPY week ahead report over the weekend, the reversal in US Treasury yields following the initial post-election surge had me thinking that risks were tilting lower, especially with momentum rolling over. How wrong I was!

Not only has USD/JPY gone in the opposite direction, but it’s also taken out last week’s high. With RSI (14) and MACD on the verge of generating fresh bullish signals, and the price remaining in an obvious uptrend, the path of least resistance is now skewing higher, barring a US inflation undershoot.

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes_6

As someone who dislikes intraday scalping, I prefer to let bullish setups come to me rather than force lower-probability plays.

155.36 is a level on the radar, a minor level that acted as support and resistance briefly in early stages of the bearish USD/JPY unwind that began in July. A break of that could encourage traders to buy with a stop beneath for protection. A retest of the level—if broken—could improve the trade’s chances of success. Pullbacks towards the uptrend established in early October would also offer a setup, allowing longs to be established with a stop beneath for protection. Aside from 155.36, 160.23 and 161.95 loom as possible targets.

To stay updated on all economic events of today, please check out our Economic calendar

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Alex

Forex

Economic

The Indian Rupee (INR) trades in negative territory on Wednesday after reaching a fresh all-time low in the previous session. The local currency is under pressure due to substantial foreign institutional outflows and heightened US Dollar (USD) demand. Despite a strengthening Greenback and outflows from local stocks, the downside for the INR might be limited amid routine interventions from the Reserve Bank of India (RBI) to sell the USD to stabilize the currency. Later on Wednesday, traders will closely monitor the US October Consumer Price Index (CPI), along with the speeches from John Williams, Lorie Logan, Jeffrey Schmid and Alberto Musalem.

Indian Rupee seems vulnerable ahead of key US CPI inflation data

India's retail inflation, based on the Consumer Price Index (CPI), rose to a 14-month high at 6.21% YoY in October versus 5.49% prior, higher than the 5.81% expected.

India’s food inflation jumped to 10.87% from 9.24% in September 2024 and 6.61% in October 2023, according to the latest official data released on Tuesday.

Indian Industrial Production grew by 3.1% YoY in September from a decline of 0.1% in August. This figure came in better than the estimation of 2.5%.

Foreign investors withdrew nearly $3 billion from local stocks in November, adding to the $11 billion of outflows in October.

Minneapolis Fed President Neel Kashkari said on Tuesday that the Fed feels confident about its long-running battle with transitory inflation, but it’s premature to declare outright victory. Kashkari further stated that the US central bank won't model Trump policies' effect on the economy until they become clear.

Richmond Fed President Tom Barkin noted on Tuesday that while inflation appears to be coming down, it might still get stuck above the Fed's target levels.

USD/INR’s positive outlook remains in play in the longer term

The Indian Rupee softens on the day. The constructive view of the USD/INR pair remains unchanged on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) exceeds 70, indicating an overbought condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation.

The immediate resistance level for USD/INR emerges at 84.50. A break above this level could draw in enough bullish pressure to the 85.00 psychological level.

In the bearish event, sustained trading below the resistance-turned-support level at 84.30 could expose the 84.05-84.10 region, representing the lower limit of the trend channel and the high of October 11. The next downside filter to watch is 83.85, the 100-day EMA. USD/INR Strengthens On Persistent Outflows, Firmer US Dollar_1

Indian Rupee FAQs

What are the key factors driving the Indian Rupee?

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

How do the decisions of the Reserve Bank of India impact the Indian Rupee?

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

What macroeconomic factors influence the value of the Indian Rupee?

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

How does inflation impact the Indian Rupee?

Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

Source: FXSTREET

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Stock Market Today: Asian Stocks Dip as Wall Street Momentum Slows with Cooling Trump Trade

Source: AP

Shopify Stock Soars 25% As Q3 Earnings Double

Is Shopify stock a buy?

GMV jumps 24%

Is Shopify stock a good buy?

Source: FXSTREET

The Buck Continues To Bound Higher

WHERE WE STAND

LOOK AHEAD

Euro Under Pressure Amid US Tariffs and German Political Shifts

US Tariffs and Economic Outlook

Germany’s Political Landscape and Economic Implications

Energy Prices and Broader Economic Impact

Outlook for the Euro

Trump Picks Musk, Entrepreneur Ramaswamy For Govt Efficiency Effort

Prominent allies

Source: Theedgemarkets

US Dollar Rips Higher as Simmering Inflation Fears Crush Fed Rate Cut Hopes

Overview

US inflation fight may not be over

Fed rate cut pricing evaporating fast

and that’s fuelling US dollar strength

DXY breaks nemesis downtrend

EUR/USD sick and unloved, understandably

USD/JPY bulls regain ascendancy

USD/INR Strengthens On Persistent Outflows, Firmer US Dollar

Indian Rupee seems vulnerable ahead of key US CPI inflation data

USD/INR’s positive outlook remains in play in the longer term

Indian Rupee FAQs

Source: FXSTREET

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