- Indian Rupee (INR) rises in risk on trade
- Oil rises & could limit gains in the Rupee
- US Dollar (USD) eases on safe haven outflows
- US retail sales, Fed minutes due
The US Dollar Indian Rupee (USD/INR) exchange rate is moving lower on Wednesday for a second straight day. The pair settled -0.67 lower on Tuesday at 75.14. At 11:30 UTC, USD/INR trades -0.05% at 75.11.
The Rupee is extending gains in risk on trade. News that Russia has pulled some of its troops back from the border with Ukraine is cooling fears that a war between Russia and Ukraine is imminent. As fears ease, investors are buying back into riskier assets such as the Rupee, whilst selling out of safe havens such as the US Dollar.
Gains in the Rupee could be limited as domestic equities head lower and as oil prices rebound. West Texas Intermediate trades +1.8%
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.14% at the time of writing at 9586 extending losses from yesterday.
The US dollar is falling on safe haven outflows as the mood in the market improves. Investor shrugged off higher than expected wholesale inflation yesterday. The producer price index was 9.7% year on year in January, in line with December, but defied expectations of a decline to 9.1%.
Looking ahead US retail sales data is expected to show a 2% increase in sales in January, compared to December. This would be a strong recovery from the -1.9% decline in sales seen in December. A strong print would show that consumers continue to spend despite inflation rising to a 40 year high.
In addition to retail sales, the minutes to the late January Fed meeting will be in focus. The Fed kept monetary policy unchanged at the meeting. However, in the press conference following Fed Chair Powell suggested that the Fed could be open to hiking rates at every meeting across the year. Should the minutes show a hawkish Fed then the US dollar could rise.
