Rupee is likely to trade sideways to lower

US DOLLAR INDEX (USD)

USD Index traded on a flat note in yesterday’s trading session owing to the disappointing release of economic data sets from the nation. The decline in consumer spending has affected retail sales which fell by more than the forecasted levels in Aug’16.  Industrial production, Producer Price Index and capacity utilization rate have also declined more than the forecasted levels thereby adding to the woes.  Due to all the above factors, markets feel that the inflation rate in future months will still remain under the Federal Reserve's 2 percent target, also constrained by sluggish wage growth. This has dimmed the possibility of a rate hike in the next week’s FOMC meeting. USD Index made an intraday low of 95.06 and ended at 95.28 levels on Thursday.

OUTLOOK

The rupee is likely to trade sideways to lower as markets indulge in speculation of INR devaluation, despite the Finance ministry denying of undertaking any such move.  This will keep the Indian Rupee a bit weak.  However, gains in the Asian markets equities owing to the disappointing release of economic data - sets from the US will act as a support factor for the rupee.

For More Details: Domestic Forex Tips

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