• Indian Rupee (INR) falls in risk-off trade
  • Indian domestic equities also fall
  • US Dollar (USD) jumps after a hawkish Powell
  • US ADP employment data & Fed Chair Powell in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a third straight day. The pair settled +0.26% higher on Tuesday at 82.02. At 10:00 UTC, USD/INR trades 0.08% at 82.09 and trades in a range of 82.03 to 82.96.

The risk-off mood following Fed Powell’s appearance last night is his hurting demand for riskier assets and currencies, such as the Rupee.

Indian domestic equities were also trading under pressure on fears that a more aggressive Federal Reserve could tip the economy into recession.

Separately oil prices falling, extending losses from the previous session, also driven lower by recession worries in the US, the world’s largest oil consumer.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.07% at the time of writing at 105.69 after booking strong gains yesterday.

The US dollar rallied heard yesterday after hawkish comments from the Federal Reserve chair Jerome Powell as he testified before Congress.

Powell warned that interest rates could rise at a faster pace and that the terminal rate could go higher than initially expected after a series of stronger-than-forecast macroeconomic data across February.

The market is now pricing in a 50 basis point rate hike in the March meeting; this was up from a plenty 5 basis point rate hike being priced in ahead of Powell’s speech. The market is also expecting rates to rise to a terminal rate of 6%, up from 5.5% previously.

The US 2 and 10-year bond yields are now the most inverted that they have been since the 1980’s. The inversion of these yields is usually considered a recession warning.

Today attention will remain on fed chair Powell as he testifies again before Congress. you ask jobs data will also be under the spotlight with ADP private payrolls expected to increase by 200,000 in February after rising by 106k in January. Strong jobs data ahead of Friday’s nonfarm payroll report could send the US dollar higher.