• Indian Rupee (INR) slips & equities struggled for direction
  • Profit taking is seen after solid earnings
  • US Dollar (USD) falls versus major peers
  • US PMI data is due

The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Tuesday for a second straight session. The pair rose +0.62% on Monday, settling at 81.47. At 11:00 UTC, USD/INR trades +0.32% at 81.72 and trades within a range of 81.42 – 81.77.

The Indian Rupee is trading lower amid mixed cues from Asian markets. Asian currencies and equity markets have been choppy on Tuesday, as the Chinese yuan and the Indonesian rupiah also falling.

Indian domestic equities struggled for direction with the Sensex trading just 0.06% higher at the time of writing and the Nifty 50 +0.02%. Indian markets pared earlier gains as investors booked profits following strong quarterly results and ahead of the Federal Reserve interest rate announcement next week.

The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.33% at the time of writing at 101.80 after mild gains yesterday.

The US dollar is resuming its downward trajectory on Tuesday, pulling to a new nine-month low as investors way up future rate hike expectations and awaits PMI data.

The US Federal Reserve is widely expected to slow the pace at which it hikes interest rates as from the February meeting. The Fed is expected to raise interest rates by 25 basis points down from 50 basis points in December. the market is also pricing in 2 25 basis point rate cuts by the end of the year. Expectations of a dovish pivot are pulling the US dollar lower.

looking ahead, attention will be on US PMI data is expected to show that business activity slowed further in January. the composite PMI is forecasted to decline to 44.7 up from 45 in December. Weak PMI data could raise concerns of a US recession and drag the USD lower.