- Indian Rupee (INR) falls after small gains yesterday
- Services PMI rose to 62, a 13 year high
- US Dollar (USD) falls versus major peers ahead of the Fed rate decision
- US ADP payroll data due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after losses in the previous session. The pair fell 0.02% in the previous session, settling on Tuesday at 81.75. At 10:00 UTC, USD/INR trades +0.07% at 81.81 and trades in a range of 81.73 to 81.89.
India’s services sector activity showed that activity expanded at the fastest pace in 13 years in April, owing to strong demand. The service sector, which accounts for around 60% of economic activity in India saw the PMI rise to 62 in April, up from 57.8 in March, its highest level since June 2010 and well ahead of forecasts of a decline to 57.
The data also showed price pressures in the sector increased at its fastest pace in several months.
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 -0.36% at the time of writing at 101.58, extending losses for a second day.
The US dollar is falling as investors look ahead to see the Federal Reserve interest rate decision later today. The Fed is widely expected to raise interest rates by 25 basis points to 5% -5.25% As it continues its fight against elevated inflation. This would take the total to 500 basis point rate hikes across the tightening cycle, the quickest hiking cycle since Volcker in the 1970’s.
The markets widely expect the Federal Reserve to signal that it is ready to pause and will be looking to see how this is communicated. Or will Federal Reserve Powell leave options open, saying that any upcoming moves will be data dependent?
The meeting comes ahead of ADP payroll data which is expected to show that private payrolls grew by 148,000 in April, just marginally higher than the 145,000 added in March. ISM services PMI is also due and is expected to show that the services sector expanded at a faster pace in April at 51.8, up from 51.2.
