The USD/INR pair has witnessed a decent buying interest in the opening trade, which has driven the asset towards 82.70 despite a quiet market mood. The asset has displayed a sheer rebound as oil prices have registered significant gains on expectations of a recovery in global economic prospects after a soft landing of the United States inflation in November consecutively for the second month.
- Apart from the decline in the interest rate pace, investors will also focus on Fed policy guidance for CY2023.
- S&P500 futures have extended their gains which indicates that the traction is in favor of risk-sensitive assets.
- USD/INR has jumped to near 82.70 as firmer oil prices have offset the impact of the subdued US Dollar.
US Dollar Index (DXY)
The US Dollar Index (DXY) is displaying topsy-turvy moves around 104.10 as investors have shifted to the sidelines ahead of the interest rate decision by the Federal Reserve (Fed). S&P500 futures have extended their gains in the Asian session, which indicates that the traction is in favor of risk-sensitive assets.
US Treasury bonds
The US Treasury bonds have gained immense interest from investors as the Fed is set to announce a smaller rate hike, delighted by a slowdown in the inflationary pressures. The 10-year US Treasury yields have dropped below 3.50%.
Inflation
The soft landing of November’s inflation report has supported Fed policymakers’ view of slowing down the policy tightening pace to safeguard the economy from financial risks and to assess the impact of efforts made in cooling off ultra-hot inflation. Apart from the extent of the decline in the interest rate pace, investors will also focus on policy guidance for CY2023.
On the oil front, soaring oil prices after a decline in US inflation have impacted the Indian Rupee. The Supply crisis in the US after a shutdown of a major pipeline has also strengthened oil prices. It is worth noting that India is a leading importer of oil and higher oil prices accelerate India’s fiscal deficit and eventually impact Indian Rupee.
