INR likely to open around 83.45

Dollar retreated against JPY, seemingly due to the BOJ intervention yesterday. INR is again around the all-time lows, but the pullback in JPY will help the Rupee back into the range. Dollar remains firm against other currencies ahead of the FOMC meeting starting today (outcome tomorrow).

Dollar Index is at 105.80, with EUR at 1.0705, GBP at 1.2550 and JPY at 156.80. Even as USDJPY saw a sharp correction, the Dollar remained strong as concerns that the FOMC will be forced to be hawkish kept the Dollar buzzing. Tomorrow’s FOMC will be watched for the tone of communication and to check whether the FOMC is ready to bite the bullet at least by Nov/Dec meetings. US equities traded moderately in the green with around 0.3-0.4% uptick. Indian equities surged yesterday, on the back of the Friday’s US market performance. 

USDJPY’s retreat could provide some relief to the Rupee for now. But appreciation possibility for the Rupee is minimal given that the Dollar is buoyed by hawkish Fed expectations. After the FOMC, markets have the US jobs report to contend with, and it is likely that the hawkish narrative could be supported by the incoming data in the coming few months. USDINR is set to be biased upwards, though capped by the RBI.