- Indian Rupee (INR) falls as risk off trade dominates
- Indian GDP expected to be upbeat
- US Dollar (USD) drops versus majora on Omicron fears
- US Fed Chair Powell to speak & consumer confidence data
The US Dollar Indian Rupee (USD/INR) exchange rate is pushing higher on Tuesday building on gains from earlier in the week. The pair settled +0.75% on Monday at 75.03. At 10:00 UTC, USD/INR trades +0.12% at 75.12.
The Indian Rupee is weakening in risk off trade after Moderna’s chief executive raised doubts over the efficacy of current COVID vaccines against the new, highly mutated COVID strain, Omicron. The CEP Stephane Bancel also said that it could takes months for large scale manufacturing of any new variant specific vaccine, dampening hopes that the jab can be quickly reformulated.
Domestic stocks were also falling lower as falling risk sentiment saw investors sell out of riskier assets. Concerns over Omicron overshadowed expectations of strong GDP data due later.
Indian economic growth is expected to show an 8.4% year on year growth in the July to September period. This would mark a sharp improvement from the 7.5% contraction recorded in the same period last year.
The US Dollar is trading higher versus the Rupee but is plunging lower versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.64% at the time of writing at 95.72, in volatile trade.
The US Dollar in plunging lower versus its major peers, despite being a safe haven currency. The currency is trading firmly lower after dovish comments from Federal Reserve chair Jerome Powell. Powell said that Omicron will pose a threat to the US economy. Testifying before the Senate Banking Committee Jerome Powell also added that high inflation could linger well into 2022.
Looking ahead there is plenty for investors to be focusing on with the release of US Conference Board consumer confidence data, home sales and another testimony by Fed Powell before the Senate. Move dovish comments by Fed Powell could spark further bets that the Fed will push back on more monetary policy tightening.