- Indian Rupee (INR) falls for a third day
- Domestic equities fall but rise in April
- US Dollar (USD) rises versus its major peers
- Fed rate decision is due tomorrow
The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a third straight day. The pair rose 0.06% in the previous session, settling on Monday at 83.45. At 10:00 UTC, USD/INR trades +0.05% at 83.49 and trades in a range of 83.40 to 83.59.
The Indian rupee struggled against the stronger U.S. dollar, tracking domestic equities lower.
The blue-chip index, the Nifty 50, fell 0.2%, and the Sensex declined 0.3%.
However, both benchmarks gained during the month of April, with the Nifty 50 rising 1.2% and the Sensex trading 1.1% higher. During this month, many large-scale Indian companies reported strong results.
Meanwhile, data from China was mixed. While the official manufacturing and non-manufacturing PMIs showed the growth slowed, the kinks in manufacturing PMI showed that manufacturing activity expanded at the fastest pace in 14 months.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.72% at the time of writing at 106.33, snapping a 2-day losing run.
The US dollar is heading higher despite weaker-than-expected consumer confidence data and ahead of the US Federal Reserve’s interest rate decision.
The Conference Board consumer confidence index slumped to its lowest level since July 2022. The index fell for a third straight month, decreasing to 97 from a downwardly revised 183.1 in March.
Consumer confidence showed Americans’ views of the labor market, and their outlook for the economy deteriorated. This could be a worrying sign for consumer spending as almost half of the respondents said that they would cut back to save money over the coming months.
Meanwhile, attention will now turn toward tomorrow’s Federal Reserve interest rate decision. The central bank is expected to leave interest rates unchanged at 5.25 to 5.5%.
Given that rate cuts are not expected, the focus will be firmly on guidance and when the Federal Reserve may start to cut interest rates. The market has pushed back on rate cut expectations after hotter-than-expected inflation so far this year.
Markets are now pricing in around 36 basis points of rate cuts in 2024 down from 150 basis points worth of cuts at the start of the year. A hawkish-sounding Fed could push the US dollar higher.
