• USD/INR has scaled firmly to near 82.50 as odds for further rate hikes by the Fed soar.
• The RBI is expected to keep the interest rate steady amid a slowdown in retail inflation.
• Market sentiment has turned negative amid US-China tensions.

The USD/INR pair has witnessed immense buying interest in the Asian session and has scaled above the critical resistance of 82.40. The impact of the upbeat United States Nonfarm Payrolls (NFP) data has strengthened the US Dollar Index (DXY).

S&P500 futures are facing sheer pressure in the Asian session as US-China tensions have joined fresh bets over the continuation of interest rate hiking by the Federal Reserve (Fed). The street started expecting a pause in the policy tightening by the Fed as the US Consumer Price Index (CPI) started demonstrating a slowdown led by a contraction in consumer spending and economic activities. However, a fresh jump in the hiring process by the US firms has faded the expectations.

There is no denying the fact that a mammoth rise in the payroll data will trigger a rebound in the inflation projections as higher liquidity with households for disposal will escalate retail demand again. This has triggered a surge in the alpha generated by the 10-year US Treasury yields above 3.55%.

On the Indian rupee front, after the Union budget announcement, investors are shifting their focus toward the announcement of the interest rate decision by the Reserve Bank of India (RBI), which is scheduled for Wednesday. RBI Governor Shaktikanta Das is expected to keep the repo rate steady at 6.5% as retail inflation has slowed down consecutively for the second month. However, core inflation is still a concern for the central bank.

Meanwhile, oil prices are failing to find a cushion after a vertical sell-off to near $73.50 as further higher interest rate hikes by the Fed will deepen US recession fears. It is worth noting that India is one of the leading importers of oil and lower oil prices might strengthen the Indian Rupee.