• Indian Rupee (INR) falls ahead of inflation data
  • Indian equities rise
  • US Dollar (USD) jumps after inflation hits almost 40 year high
  • Fed expected to taper at a faster pace

The US Dollar Indian Rupee (USD/INR) exchange rate is moving higher on Monday, building on gains from last week. The pair settled +0.6% on Thursday at 75.69, towards the weekly high. At 10:00 UTC, USD/INR trades +0.10% at 75.77.

Indian inflation data is due later. Analysts broadly expect inflation to tick higher to 5.1% in November, up from 5.48% in October.

The data comes after the Reserve Bank of India left interest rates on hold in the final monetary policy meeting of the year, despite acknowledging that price pressures could persist in the near term.

Separately, domestic equities were gaining ground on the back of strong gains in metal stocks and IT. Meanwhile oil prices were also on the rise As Omicron fears ease. West Texas Intermediate trades 0.3% higher.

The US Dollar is trading higher across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.3% at the time of writing at 96.42 after finishing the previous week flat.

The US Dollar traded lower on Friday despite US inflation rising to 6.8% in November, the highest rate of consumer price growth in almost 40 years.

Whilst US Dollar traded lower on Friday following the data release, the greenback is making up for it today. Attention is now moving towards the Federal Reserve monetary policy meeting later in the week. With inflation at its highest level since 1982 and after starting the tapering of its bond purchases in the November meeting, the Fed is broadly expected to accelerate the pace at which it is tapering bond purchases going forward. This would mean that ultimately an interest rate hike could happen sooner, boosting the US dollar.

There is no high impacting US data due to be released today. Investors will look ahead to PPI data due tomorrow.