GBP/USD: Dollar vs. Pound Awaits Fed Chair Powell's Appearance Before Congress
  • Indian Rupee (INR) steady, domestic equities fall
  • Oil prices continue climbing
  • US Dollar (USD) trades quietly ahead of the Fed
  • Will the Fed start taper talk?

The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Wednesday after strong gains in the previous session.  The pair settled +0.23% higher on Monday at 73.50. At 11:00 UTC, USD/INR trades -0.05% lower at 73.31.

The Rupee is holding steady after losses in the previous session, as investors await the outcome of the latest Fed meeting before making any moves. Investors will also be wary of rising crude oil prices as well.

Domestic equities are trading lower, retreating from recent highs. Reliance Industries and financial stocks are the biggest drag on the indices in cautious trade. The Sensex trades -0.5% whilst the blue chip Nifty 50 is also off by 0.6%.

Oil prices are also in focus as they keep rising. WTI crude trades comfortably over $70 per barel. The improving demand outlook, in addition to falling inventories are lifting prices.

The US Dollar is trading higher versus the Rupee. However, it is trading flat versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.02% at the time of writing at 90.50. It has barely moved over the past three days.

The US Dollar is trading subdued ahead of the Federal Reserve monetary policy announcement later today. The Fed is not expected to adjust policy, leaving the interest rate at 0%-0.25% and the bond buying programme unchanged at $120 billion per month.

The meeting comes against a backdrop of soaring inflation as the economy rebounds from the pandemic hit. However, the labour market recovery hasn’t fired up in the same way. The non farm payroll has missed forecasts across the past two months.

Investors will be watching carefully to see whether the Fed looks to start discussions surrounding monetary policy normalization. Should the Fed start to talk about tapering its bond purchases then the US Dollar could jump higher.