- Pakistan Rupee (PKR) traces equities lower
- Karachi 100 sheds 4.6% so far this week
- US Dollar (USD) rises ahead of CPI data
- US bond auction in focus
The US Dollar Pakistan Rupee (USD/PKR) exchange rate is advancing on Wednesday, after booking mild losses in the previous session. The pair settled -0.05% lower at 156.46 on Tuesday. At 11:00 UTC, USD/PKR trades +0.3% at 157.07.
The Rupee is tracing domestic equities lower. The benchmark Karachi 100 closed the session -1.2% as inflation concerns persist, fueling the market’s plunge. Wednesday marked the third consecutive day of weakness in the equities market, with stocks already down 4.6% so far this week alone.
Oil prices were offering some support, trading lower for the third straight session after rallying 11% across the end of last week. Attention will now turn to EIA oil inventory data due later today. Yesterday’s API report revealed a rise in crude inventories by 12.8 millon barrels. This was significantly ahead of the 800,000 forecast.
The US Dollar is trending higher across the board. The US Dollar Index which measures the greenback versus a basket of major peers trades +0.1% over 92.00 at the time of writing.
The US Dollar is rebounding from steep losses in the previous session as US bond yields stabilized after falling from a yearly high.
US yields have been a key market driver recently as investors ramp up inflation expectations. The vaccine rollout programme, reopening of the US economy and the $1.9 trillion stimulus package mean that the US economy is expected to recovery even more rapidly.
Today sees the release of US inflation data as measured by the consumer price index. Analysts expect CPI to rise 0.4% month on month in February, up from 0.3% in January. On an annual basis a rise to 1.7% is forecast, up from 1.4%. A strong print could prompt speculation of an earlier move by the Fed to tighten policy.
Following the inflation release, the US 10 year bond auction will also be closely eyed. Weak participation levels could send bond yields higher and boost the greenback.