• Indian Rupee (INR) holds steady after gains last week
  • Domestic equities and oil prices fall
  • US Dollar (USD) rises versus its major peers
  • US inflation data tomorrow is in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady after modest losses last week. The pair fell -0.12% in the previous week, settling on Friday at 82.84. At 18:00 UTC, USD/INR trades +0.02% at 82.80 and trades in a range of 82.65 to 82.94.

The Indian rupee was in the spotlight on Monday after data from China, one of its largest trading partners, raised concerns about the fragile economic recovery.

While Chinese consumer inflation was stronger than expected, wholesale inflation, as measured by the PPI, was cooler than forecast, keeping the Asian currencies under pressure.

Meanwhile, the Rupee was supported by weak oil prices, as oil fell over 1% on concerns over the demand outlook.

Separately, Indian domestic equities fell on Monday, weighed down by a decline in banking fantastic group stocks. Investors booked profits ahead of tomorrow’s inflation data.

The US Dollar is rising across the board peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.18% at the time of writing at 102.85 as it attempts to recover some of last week’s losses.

The US dollar is attempting to move higher on Monday, tracking treasury yields northwards as investors await tomorrow’s inflation data. This data could provide more clues about when the Federal Reserve will begin cutting interest rates.

The data comes after the US dollar fell to a two-month low on Friday following the US nonfarm payroll report, which showed the jobs rose by 270,000, stronger than the expectations of 200,000; however, January payrolls were revised lower to 229,000 from 353,000.

The February unemployment rate rose to a two-year high of 3.9%, highlighting weakness in the labour market. Average hourly earnings eased to 4.3%, down from 4.4%.

The US dollar struggled last week after Federal Reserve Powell said in a testimony before Congress that the Federal Reserve was not far from being confident enough to start cutting interest rates.

Ahead of tomorrow’s inflation data, the market is pricing at an 89% probability of a rate cut in the June meeting.