• Indian Rupee (INR) traces domestic equities lower
  • Oil prices rise 3%
  • US Dollar (USD) falls ahead of key inflation data
  • US CPI data in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is trading modestly higher on Wednesday, paring some losses from the previous session. The pair settled -0.19% lower on Thursday at 77.20. At 11:00 UTC, USD/INR trades +0.07% at 77.25.

The Rupee is tracing domestic equities lower as Indian stocks head lower for a fourth straight session.

The Nifty 50 trades -0.45% lower, while the Sensex trades over 1% lower at the time of writing.

A broad risk-off mood has engulfed the Indian stock market over the past few sessions amid concerns over the health of the Chinese economy as COVID lockdowns continue, oil prices rise, and ahead of US inflation data later today could direct the Federal Reserve’s next steps.

Oil prices are rising after losing 10% across the previous three sessions. West Texas Intermediate trades 3% higher at $103, rebounding from a low of 98.65.

The US Dollar is rising versus the Rupee but falling against major peers. The US Dollar Index measures the greenback versus a basket of major currencies trades -0.30% at the time of writing at 103.60 after gains in the previous session.

The US dollar rose yesterday after Cleveland Federal Reserve President Loretta Mester said a 75 basis point interest rate hike could remain an option in upcoming Fed meetings. The prospect of a more hawkish Fed sent the USD higher.

Today all eyes are on the US inflation data as measured by the consumer price index. Analysts expect CPI to come in at 8.1% year on year in April, down from 8.5% in March. This would mark the first time CPI inflation has fallen since August last year.

Core inflation which strips out more volatile items such as food and fuel, is also expected to ease to 6%, down from 6.5%.

Slowing inflation could see investors rein in aggressively hawkish Fed bets, pulling the USD lower.