- Indian Rupee (INR) rebounds in risk on trade
- Rising oil prices could limit gains.
- US Dollar (USD) falls versus majors as bond yields ease lower
- US CPI & bond auction tomorrow
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Tuesday, snapping a two day winning streak. The pair settled +0.2% higher in the previous session at 73.35. At 12:15 UTC, USD/INR trades -0.50% at 73.03.
The Rupee is rebounding spurred on by gains in the domestic equity market and owing to the US Dollar retreating from three and a half month highs. Global equities are advancing in risk on trade. Meanwhile rising oil prices could limit gains.
Oil prices have been pushing firmly higher over the past few months supported by the covid vaccine drive and global economies reopening. Political tensions in Saudi Arabia also briefly pushed oil prices to 2 year highs on Monday, with Brent advancing beyond $70.
There is no high impacting Indian economic data due to be released today. Investors will look ahead to Friday which sees inflation data, manufacturing & industrial production numbers in addition to foreign exchange reserves.
The safe haven US Dollar under pressure in risk on trade and as US treasury yields ease lower. The US Dollar Index, which measures the greenback versus its major peers trades -0.4% at the time of writing as drops away from multi month highs.
US 10-year bond yields are falling back on Tuesday after having reached 1.62% on Monday a pre-pandemic high. Bonds sold off and yields rose after the US Senate passed the Democrats $1.9 trillion covid stimulus bill. However, soothing words from central banks and an intervention by Chinese authorities in the Chinese stock market have worked to calm concerns. This is evident by rising equity markets as US futures advance.
Yields will remain in focus over the coming days. Where they remain at current lower level depends largely on demand at tomorrow’s US bond auctions and the release of the US Consumer Price Index inflation gauge on Wednesday..