• Indian Rupee (INR) rises in risk on trade
  • Domestic equities rise
  • US Dollar (USD) falls versus major peers
  • US jobless claims data due

The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Thursday after a flat session yesterday. The pair closed +0.01% yesterday settling at 82.17. At 12:00 UTC, USD/INR trades -0.14% at 82.13 and trades in a range of 82.13 to 82.28.

The Rupee is rising amid a buoyant market mood and as domestic equities rise. The Sensex trades 0.6% higher at the time of writing and the Nifty 50 trades up 0.76%.

On the data front, the Indian government plans to borrow 8.88 trillion Rupee ($108.08 billion) via bonds in the first six months of the new financial year. This equates to about 57% of total borrowing this fiscal year, which is slightly above expectations of 55%.

Borrowing has more than doubled since 2019 when Prime Minister Narendra Modi came to power through a landslide victory. A large part of this increase was owing to the pandemic.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.15% at the time of writing at 102.39, reversing gains from yesterday.

The US dollar is falling lower as the market mood continues to improve and as investors remain convinced that the Federal Reserve will pause interest rate hikes. The market is pricing in a 59% Probability of the Fed keeping rates on hold in the May meeting and it’s also pricing in two rate cuts by the end of the year.

Attention is now turning to US jobless claims data which is expected to show that initial claims rose to 196,000 up from 191,000 the previous week. This would suggest that the US labour market remains resilient despite high inflation and rising interest rates. A strong jobs market could boost hawkish Federal Reserve bets and lift the USD.

US Q4 GDP data will also be in focus and is expected to confirm the earlier reading of 2.7% quarter on quarter annualised.