- Indian Rupee (INR) slips after gains yesterday
- Indian inflation is expected to rise
- US Dollar (USD) falls versus major peers
- US CPI data is due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after losses yesterday. The pair fell -0.1% in the previous session, settling on Monday at 83.35. At 12:00 UTC, USD/INR trades +0.04% at 83.38 and trades in a range of 83.34 to 83.40.
The Indian rupee Is edging lower, tracking domestic equities southwards ahead of Indian inflation data due later.
India’s inflation, as measured by the consumer price index is expected to show an increase after three months of decline, owing to higher food prices.
Indian inflation is expected to rise to 5.8% annually in November up from 4.9% in October as vegetables and cereals prices rise. At this level consumer price inflation would remain within the upper limit of the Reserve Bank of India’s acceptable inflation range.
The data comes as the Indian domestic equities are also falling, dragged lower by energy stocks which are down 1.3% and snapping a rally which has seen the index climb around 20% across the past six weeks.
The US Dollar is rising against the Rupee but is falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades =0.2% at the time of writing at 103.88, after strong gains on Monday.
The U.S. dollar is falling as investors await anxiously ahead of US inflation data, which could provide major clues for the Federal Reserve interest rate decision later in the week.
While economists have predicted inflation will cool to 3.1% year on year in November, down from 3.2% in October, the stronger-than-forecast US non-farm payroll report could be a precursor to hotter-than-expected inflation data today.
On Friday, the US jobs report showed that unemployment unexpectedly fell to 3.7% and job creation was 199k.
The data comes ahead of the Federal Reserve interest rate decision on Wednesday, where the Federal Open Market Committee is expected to leave interest rates unchanged at 5.25% to 5.5%. According to the CME Fed watch tool, the market is pricing in around a 77% chance of a rate cut in May.
