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• The Indian Rupee ticks down against the US Dollar at open ahead of a two-day GST council meeting.
• Indian Commerce Minister Goyal confirmed that New Delhi is in talks with Washington on a trade deal.
• A sharp increase in long-term bond yields across the globe improves safe-haven demand.

The Indian Rupee (INR) declines against the US Dollar (USD) on Wednesday. The USD/INR pair rises to near 88.30 ahead of the two-day Goods and Services Tax (GST) council meeting on Wednesday, aiming to revise tax slabs from four to two.

On the eve of independence on August 15, Indian Prime Minister Narendra Modi announced that the government will reveal new GST slabs to boost consumption around Deepawali, which will be celebrated on October 21.

According to a report from The Indian Express, the centre will abolish 12% and 28% slabs, and will shift these items into the remaining 5% and 18% tax brackets. Such a scenario will be inflationary for the Indian economy and may restrict the Reserve Bank of India (RBI) from reducing interest rates in the near term.

Meanwhile, India’s Trade Minister Piyush Goyal has expressed confidence, in his speech at an industry chamber event on Tuesday, that New Delhi will close a tariff deal with the United States (US). “We are in dialogue with the US for a bilateral trade deal,” Goyal said, The Economic Times reported. Goyal added that India is getting new trading arrangements with countries such as the European Union (EU), Chile, Peru, New Zealand, Australia, Oman and has already concluded deals with the EFTA bloc, UK, and UAE.

A slightly positive commentary from Indian Commerce Minister Goyal on trade deal with the US has come at a time when President Donald Trump has been criticizing New Delhi for doing “one-sided business” with Washington for a long time.

On Tuesday, US President Trump criticized India again while addressing reporters at the Oval Office. "We get along with India very well, but for many years, it was a one-sided relationship. India was charging us tremendous tariffs, the highest in the world,” Trump said, Hindustan Times reported.

Domestically, final HSBC Composite Purchasing Managers' Index (PMI) data for August has come in weaker than preliminary estimates. The Composte PMI dropped to 63.2 from the prior estimates of 65.2.

The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the US Dollar.
 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).

Daily digest market movers: Investors await key US JOLTS Job Openings data
 

• A slight upside move in the USD/INR pair is also driven by strength in the US Dollar. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rose to near 98.50.
• The US Dollar trades firmly as its safe-haven demand has increased, following risk-off market sentiment due to soaring long-term bond yields worldwide.
• A significant increase in long-term bond yields signifies mounting investors’ concerns over government debt. Rising government borrowing costs often lead to a decline in welfare spending, henceforth increasing the appeal of safe-haven bets.
• Domestically, the verdict from the US appeals court against President Donald Trump’s tariffs, citing many of them as “illegal”, has led to a sharp decline in indices on Wall Street. US tech stocks tumbled after an extended weekend on Tuesday after the court ruled against Trump’s tariffs, stating that Trump wrongfully invoked emergency law.
• Meanwhile, US President Trump has announced that he will push the case to the Supreme Court for an expedited ruling on tariffs.
• On the economic front, investors await the Nonfarm Payrolls (NFP) data for August, which will be released on Friday. Investors will pay close attention to the NFP data as the July report intensified market expectations in favor of interest rate cuts by the Federal Reserve (Fed) for the September meeting.
• According to the CME FedWatch tool, there is an almost 92% chance that the Fed will cut interest rates in the September policy meeting.
• In Wednesday’s session, investors will focus on JOLTS Job Openings data for July, which will be published at 14:00 GMT. The report is expected to show that US employers posted fresh 7.4 million jobs, almost in line with the prior reading of 7.44 million.

Technical Analysis: USD/INR trades stably above 88.00
 

The USD/INR pair broadly turns sideways after posting a fresh all-time high of around 88.50 on Monday. The near-term trend of the pair remains bullish as it holds above the 20-day Exponential Moving Average (EMA), which trades near 87.69.

The 14-day Relative Strength Index (RSI) stabilizes above 60.00, suggesting that a fresh bullish momentum has come into effect.

Looking down, the 20-day will act as key support for the major. On the upside, the pair has entered uncharted territory. The round figure of 89.00 would be the key hurdle for the pair.

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