The USD/INR pair is clinging to mild gains during the first positive daily performance in three, as it snaps a two-day losing streak amid mostly downbeat sentiment. The US Dollar Index (DXY) grinds near the six-week top surrounding 104.30, marked earlier in Asia, as it cheers the hawkish concerns about the Federal Reserve’s (Fed) next move amid strong US data and upbeat comments from the Fed policymakers.
Producer Price Index (PPI) for January gained major attention by rising the most since June with 0.7% MoM figure. Also positive for the USD/INR pair was the improvement in the US Initial Jobless Claims for the week ended on February 10, 194K versus 200K expected and 195K prior. On the contrary, a slump in the Housing Starts for January and the Philadelphia Fed Manufacturing Survey for February seemed to have gained a little attention.
Following the data, the FEDWATCH tool, observed via Reuters, suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year. The same signals a higher policy pivot than the 5.10% peak conveyed by the Fed in the December meeting, which in turn hints at a few more rate hikes from the US central bank and favors the US Dollar.
Cleveland Fed President Loretta Mester recently teased the recession woes while repeating the previous defense of the highest rates. Before that, St. Louis Federal Reserve’s James Bullard bolstered the hawkish Fed bias while saying, “Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.”
US President Joe Biden fired shots at his Chinese counterpart while conveying the expectations for a talk with the Chinese leader, during an interview with NBC News. “I think the last thing that Xi wants is to fundamentally rip the relationship with the United States and with me,” said US President Biden per Reuters. This has weighed on the sentiment and underpinned the USD/INR rebound.
S&P 500 Futures mark 0.30% intraday losses to 4,086 while poking the weekly low after falling the most in a month on Thursday. Additionally, the US 10-year Treasury bond yields rise to a fresh high since December 30, 2022, whereas the two-year US Treasury bond also renews the highest levels since November 2022, making rounds to 3.88% and 4.68% in that order.
On the other hand, the Oil price weakness and the Reserve Bank of India’s (RBI) hawkish concerns seem challenging the USD/INR bulls amid a light calendar ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting minutes. A sustained bounce off the 10-day Exponential Moving Average (EMA), around 82.60 by the press time, keeps USD/INR buyers hopeful of crossing the four-month-old resistance line near the 83.00 round figure.
The US Dollar is currently on an uptrend due to the strong economic data and the hawkish comments from the Federal Reserve policymakers. The upbeat US Producer Price Index (PPI) and Initial Jobless Claims data have further bolstered the US Dollar’s strength. The FEDWATCH tool suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year, which hints at a few more rate hikes from the US central bank and favors the US Dollar.
US President Joe Biden’s recent comments on his Chinese counterpart are also weighing on the sentiment and have underpinned the USD/INR rebound. The S&P 500 Futures are marking 0.30% intraday losses to 4,086 while poking the weekly low after falling the most in a month on Thursday. Additionally, the US 10-year Treasury bond yields have risen to a fresh high since December 30, 2022, whereas the two-year US Treasury bond has also renewed the highest levels since November 2022.
However, the Oil price weakness and the Reserve Bank of India’s (RBI) hawkish concerns seem to be challenging the USD/INR bulls amid a light calendar ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting minutes. A sustained bounce off the 10-day Exponential Moving Average (EMA), around 82.60 by the press time, keeps USD/INR buyers hopeful of crossing the four-month-old resistance line near the 83.00 round figure.
Overall, the US Dollar is currently on an uptrend due to the strong economic data and the hawkish comments from the Federal Reserve policymakers. The upbeat US Producer Price Index (PPI) and Initial Jobless Claims data have further bolstered the US Dollar’s strength. The FEDWATCH tool suggests that the interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year, which hints at a few more rate hikes from the US central bank and favors the US Dollar.
On the other hand, the Oil price weakness and the Reserve Bank of India’s (RBI) hawkish concerns seem to be challenging the USD/INR bulls. Despite this, a sustained bounce off the 10-day Exponential Moving Average (EMA), around 82.60 by the press time, keeps USD/INR buyers hopeful of crossing the four-month-old resistance line near the 83.00 round figure. Light calendar ahead of next week’s FOMC Minutes can keep buyers hopeful.
