- Indian Rupee (INR) falls after manufacturing PMI slowed for a 2nd month
- Manufacturing activity fell to an 8-month low
- US Dollar (USD) rises ahead of the Fed rate decision
- Fed is expected to leave rates on hold
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after mild gains yesterday. The pair rose +0.01% in the previous session, settling on Tuesday at 83.25. At 11:00 UTC, USD/INR trades +0.08% at 83.32 and trades in a range of 83.25 to 83.35.
Manufacturing growth in India slowed for a second straight month in October as demand cooled. This combined with a larger increase in the cost of raw materials had a negative impact on business confidence.
The S&P global manufacturing purchasing managers index (PMI) dropped to an 8-month low of 55.5 in October, down from 57.5 in September and defying expectations of a rise to 57.7.
This was, however, the 28th straight month that the manufacturing PMI has held above the 50 level, which separates expansion from contraction.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.19% at the time of writing at 106.83, marking the second straight day of gains.
Meanwhile, the US dollar is pushing higher against its major peers as attention turns to the Federal Reserve interest rate decision later today. Economists expect the U.S. central bank to leave rights at a 22-year high of 5.25 to 5.5%. However, the Fed is likely to keep the option of another rate hike before the end of the year on the table amid resilience in the US economy.
Recent US data has come in ahead of forecasts in retail sales, nonfarm payrolls, housing activity inflation, and growth. However, Fed policymakers have been vocal in their stance that they will hold rates home pause this month. This is because a surge in treasury yields means conditions have tightened, and high yields are doing some of the heavy lifting for the Fed.
Still, the meeting could give the market more clues over the likelihood of an interest rate hike in December. According to the CME Fed watch tool, the market is pricing in just a 30% likelihood of the Fed hiking rates in the final month of the year.
