• Indian Rupee (INR) falls in risk-off trade
  • Geopolitical worries & China’s growth is downwardly revised
  • US Dollar (USD) falls versus major peers
  • USD tracks US treasury yields lower

The US Dollar Indian Rupee (USD/INR) exchange rate is rising, adding to gains from the previous week. The pair rose 0.08% across last week, settling on Friday at 81.98. At 11:30 UTC, USD/INR trades +0.07% at 82.04 and trades in a range of 81.94 to 82.06.

The Rupee, along with other risky assets and currencies, are trading lower in risk-off trade, fueled by a combination of geopolitical concerns after a revolt by Russian mercenaries over the weekend raised concerns about political instability in Russia and slowing growth concerns after the S&P downwardly revised its growth forecast for China.

The S&P expects China to grow 5.2% this year, down from 5.5%, citing an uneven recovery from the pandemic.

The US Dollar is rising against the Rupee but falling against the US dollar. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.2% at the time of writing at 102.71, paring gains from last week.

The US dollar is heading lower, tracking treasury yields lower, as investors looked to the treasuries for safety and a hedge over central banks pushing their hiking cycles too far.

The move into treasuries come after Federal Reserve chair Jerome Powell’s hawkish comments before Congress in the previous week. Powell indicated that interest rates need to rise higher in order to tame inflation and pointed to two more rate hikes across this year.

Data on Friday was also weaker than expected, as business activity was much slower than expected. The composite PMI weakened to 53 in June, down from 54.3, as the manufacturing PMI dropped to 46.3 from 48.4. The level 50 separates expansion from contraction.

Today there is no high impacting US economic data. Investors will focus on Dallas Fed manufacturing ahead of another appearance by Powell last in the week and US core PCE data on Friday.