Forex News

• USD/INR has surpassed the critical hurdle of 81.60 amid sheer recovery in the USD Index.

• Anxiety ahead of the US PCE data has trimmed the risk appetite of the market participants.

• Softening US core PCE price index might not surprise investors as core US CPI and PPI were also trimmed.

The USD/INR pair has witnessed a respopsive buying interest after droping to near 81.40. The asset has been scaled above 81.60 and is expected to extend gains, following the footprints of the US Dollar Index (DXY). The risk appetite of the amrket participants has dropped significantly as investors are shifting their focus towards the announcmenet of the interest rate decision by the Federal Reserve (Fed).

But before that, investors will keep an eye over the release of the United States Personal Consumption Expenditure (PCE) Price Index (Dec) data. Reuters estimates show that markets expect the core PCE inflation, which excludes volatile food and energy prices, to rise 0.3% on a monthly basis and forecast the annual rate to decline to 4.4% from 4.7% in November. A decline in the economic data shouldn’t surprise investors as Decembers’ core Producer Price Index (PPI) and Consumer Price Index (CPI) have already dropped significantly.

Volatilty triggered in the market ahead of the Fed’ monetary policy has accelerated selling pressure in the risk-perceived assets. S&P500 futures have dropped sharply amid pessimism that further interest rate hikes by Fed chair Jerome Powell will accelerate recession fears. Firms will be forced to halt their recruitiment process or might look for laying-off employees in anticipation of weaker demand projections.

On the Indian Rupee front, fresh development over digital currency announced by the Reserve Bank of India (RBI) is impacting the Indian Rupee. RBI Executive Director Ajay Kumar mentioned that digital currency will further bolster the digital economy, make payment system more efficient.