USD/INR Price News: Indian rupee recovers early losses of RBI Inflation report

• USD/INR has slipped to 82.75 after a breakdown of intraday consolidation.
• The RBI will provide a special report on inflation equipped with reasons and remedies for higher inflation.
• Fed’s hawkish guidance has turned the overall risk tone extremely negative.

The USD/INR pair has surrendered its opening gains recorded due to a bigger rate hike announcement by the Federal Reserve (Fed) on Wednesday. In the morning session, the asset displayed a gap-up open as a fourth consecutive 75 basis point (bps) rate hike by the Fed weighed on risk-perceived currencies.

Fed chair Jerome Powell also sounded hawkish while providing guidance cited that it is very premature to be thinking about pausing the policy tightening spell now as short-term inflation has remained higher than projections.

Meanwhile, the US dollar index (DXY) is oscillating below 112.00 after a marginal fall, however, the overall risk tone is extremely negative as policy tightening measures have weakened economic projections. S&P500 futures are failing to recover firmly as higher interest rates have escalated fears of a decline in earnings guidance by the corporate.

Now, investors are looking for the release of a special inflation report by the Reserve Bank of India (RBI) that will display reasons and remedies for higher inflation. Retail inflation in India has climbed to a high of 7.4% beyond the tolerance of 6% as mandated by the RBI consecutively for three quarters.

This week, the release of the US Nonfarm Payrolls (NFP) data will be of utmost importance. But before that, Wednesday’s release of US Automatic Data Processing (ADP) Employment Change has remained upbeat. The US economy has added 239k fresh jobs in the labor market, which will support the Fed to keep up the pace of hiking rates further.

The US NFP is seen lower at 200k vs. the prior release of 263k. While the Unemployment Rate will increase to 3.6%.