- Indian Rupee (INR) shows resilience
- Domestic equities fall
- US Dollar (USD) holds steady versus major peers on safe-haven flows
- US PMI data in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is falling, extending losses from the previous session. The pair fell 0.09% yesterday settling at 79.85 after trading in a range 79.76 to 79.90. At 10:00 UTC, USD/INR trades -0.03% at 79.84.
The Rupee is heading higher, despite some weakness in domestic equities and oil prices rising.
Oil prices are pushing higher as concerns over tight supply overshadow worries that slowing global growth could hurt the demand outlook for oil. Oil has risen over 1% on comments from Saudi Arabia that it could cut oil production to support prices which has fallen steeply in recent weeks.
Oil prices had surged to $147 per barrel earlier in the year and now trade at $90 per barrel as recession fears pulled the price lower.
Separately, domestic equities are trading lower, pulled southward by the tech sector, which overshadowed gains in banking stocks. The Sensex trades -0.25% at the time of writing
The US Dollar is falling versus the Rupee but is holding steady versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.01% at the time of writing at 108.97 after gains of 0.7% yesterday.
The USD rose yesterday tracing US treasury yields higher as the market continued to price in a more hawkish Federal Reserve. Cooler inflation data a few weeks ago had seen the USD slip as investors expected a softer tone from the Fed. However, increasingly we are seeing the relaisation being priced in that the Fed is likely to reiterate its hawkish stance at the Jackson Hole Symposium.
Looking ahead US PMI data is due to be released. Expectations are for the composite PMI to fall to 47.5, down from 47.7. A better than expected reading could fuel bets that the Federal Reserve will keep hiking rate aggressively, sending the USD higher.