• Indian Rupee (INR) edged lower trading stocks southwards
  • Evergrande fears still linger
  • US Dollar (USD) rallies tracing treasury yields higher
  • US consumer confidence data is due

The US Dollar Indian Rupee (USD/INR) exchange rate is advancing on Tuesday after a quiet start to the week. The pair settled just a few pips higher on Monday at 73.82. At 11:30 UTC, USD/INR trades 0.30% higher 74.08.

The Rupee is tracing domestic equities lower. Indian shares tumbled by more than 1% at one point snapping a three-day winning run. A downturn in sentiment over China’s debt ridden Evergrande was to blame for the risk off mood in the market.

The Sensex currently trades -0.6% lower whilst the Nifty 50 is heading into the close -0.7% lower.

Separately oil prices continue to climb. West Texas Intermediate trades over 1% higher as it advances for the sixth straight session on tight supply.

There is no high impacting Indian macro data due to be released. Investors will look ahead to manufacturing PMI data on Friday.

The US Dollar is trading higher across the board on Tuesday. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.22% at the time of writing at 93.59 extending gains from the previous session.

The US Dollar is powering higher boosted by rising US treasury yields. The US treasury yield has surged to a 3-month high at 1.5% yesterday. Investors are starting to position themselves for the Federal Reserve tapering bond purchases later this year. The shift comes following the FOMC meeting last week where the Fed indicated that the time was approaching when asset tapering will be warranted.

Today attention will remain on the Federal Reserve as Fed Chair Jerome Powell is due to testify before Congress. US consumer confidence data will also be in focus. In August confidence plunged 113.8 the lowest reading since February. This month analysts are expecting confidence to edge higher to 114.5.