Ella 
During the Asian session on Monday, USD/INR traded lower near 82.80, extending losses for the third consecutive day. The pair is under downward pressure as odds increase that the U.S. Federal Reserve (Fed) will keep interest rates on hold at its upcoming September meeting.
Additionally, continued gains in the Gift Nifty Index also provided support to the Indian Rupee (INR). USD futures contracts based on the Nifty 50 index are trading higher near 19985.0. Additionally, investors will be closely watching the Reserve Bank of India’s (RBI) response to potential volatility. Central bank actions and statements can have a significant impact on market stability and investor confidence.
However, the Fed is expected to keep interest rates high for an extended period of time. Additionally, traders expect the Federal Reserve may raise interest rates by 25 basis points by the end of 2023. This hawkish stance from the central bank is likely to provide further support to the USD/INR pair.
The U.S. Dollar Index (DXY), which compares the greenback’s performance against six other major currencies, is trading lower near 104.70. However, rising U.S. Treasury yields may provide support for a stronger dollar. At press time, the 10-year Treasury yield rose 0.70% to 4.29%.
In addition, U.S. initial jobless claims for the week ended September 2 were 216,000, better than market expectations of 234,000 and lower than the revised 229,000 the previous week. This favorable labor market data is likely to support the dollar’s resilience.
U.S. Treasury Secretary Janet Yellen said after attending the G20 summit that she is increasingly confident in the United States’ ability to deal with inflation without causing significant damage to the job market. Yellen also noted that “every measure of inflation is on a downward path,” hinting at expectations for a decline in various inflation measures.
Chicago Fed President Austan Goolsbee made it clear that the U.S. Federal Reserve’s (Fed) goal is to guide the economy onto a “golden path” that means falling inflation without triggering a recession.
Investors are likely to focus on consumer price index (CPI) data for August from the U.S. and India due later this week. These data sets are expected to provide valuable information on understanding inflation in both economies and may influence investor decisions regarding the USD/INR currency pair.
