18 Sept 2022

USD gains amid sharp Fed rate hike expectations

USD rose yesterday after upbeat data boosted expectations that the Federal Reserve will raise interest rates at a faster pace in the coming months. INR fell on the expectation that the Indian current account is expected to widen to a decade high in the April to June quarter.

author dp
Team INRBonds
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  • USD rose yesterday after upbeat data boosted expectations that the Federal Reserve will raise interest rates at a faster pace in the coming months.
  • US retail sales surprised the market and rose 0.3% month on month, ahead of expectation of staying unchanged at 0%.
  • US initial jobless claims fell to 213,000, this was down from 218,000 in the previous week against the expectation of 126,000.
  • US CPI rose 0.1% in August, and was up 8.3% from a year earlier
  • INR fell on the expectation that the Indian current account is expected to widen to a decade high  level in the April to June quarter. On the back of surging global commodity prices and the largest capital outflows since the 2008 financial crisis.
  • Trade deficit in the last quarter is expected to be USD 30.5 billion, equivalent to 3.6% of GDP, the highest level in around 10 years.
  • Fitch rating has cut the country’s economic growth forecasts for the current fiscal year. Fitch predicts that GDP will be 7%, down from 7.8%; it also forecast a slower pace of growth in FY 2024 to 6.7%, down from 7.4%.

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