- Indian Rupee (INR) weakens snapping 6 session winning run
- Covid cases jump to 28,903
- US Dollar (USD) flat versus major peers
- Fed rate decision in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is heading higher snapping a 6 session losing streak. The pair settled -0.03% lower on Tuesday at 72.51. At 13:45 UTC, USD/INR trades +0.1% at 72.58.
The Rupee is under pressure as covid cases in India hit a three month high. Prime Minister Narendra Modi warned that quick and decisive action was needed to prevent the latest increase in cases from developing into a second peak.
The number of coronavirus cases jumped by 28,903 on Wednesday, the highest since December 13. The total now stands at 11.4 million. The vaccination drive in India continues with 36 million vaccine doses administered, which are mostly AstraZeneca.
The US Dollar advancing versus the Rupee. However, it is trading flat versus its major peers. The US Dollar Index which gauges the greenback versus 6 major peers trades just 3 pips higher at 91.86 at the time of writing.
Investors are firmly focused on the Federal Reserve monetary policy announcement due today at 18:00 UTC. This a hugely anticipated event because it is the first Fed meeting since US treasury yields starting surging higher as US inflation expectations ramped up.
The US central bank is not expected to change its interest rate or bond purchase programme. With this in mind the focus of the meeting will be on the dot plot (where Fed members see interest rates going) and forecasts. The Fed is expected to upwardly revise its growth and inflation forecasts.
Fed Chair Jerome Powell will be in a difficult position of sounding upbeat regarding the vaccine and stimulus led recovery, without bolstering fears of the economy overheating and tighter rates round the corner.
How the market reacts to the upward revisions and Jerome Powell’s tone could direct the US Dollar over the coming week. A hint too much optimism and the US Dollar could surge higher.