The rupee appreciated 2 paise to 82.89 (Dh22.5) against the US dollar in early trade on Monday on the back of foreign funds inflow and retreating crude oil prices in the overseas market.
Forex traders said subdued equity market sentiment and strengthening American currency weighed on the domestic unit.
Also, they said investors adopted cautious approach ahead of inflation and other macroeconomic data to be released in India as well as in the US later this week.
Asian market
Asian shares stalled near seven-month highs on Monday as investors awaited inflation data from the United States, Japan and Europe that will help refine expectations for future rate moves.
The Federal Reserve’s favoured measure of inflation – the core personal consumption expenditures (PCE) price index – is due on Thursday and forecasts are for a rise of 0.4%.
It was not long ago investors were hoping for just a 0.2% increase but high readings on consumer and producer prices suggest the risk is for a result as high as 0.5%.
Markets have already pushed out the likely timing of a first Fed easing from May to June, which is currently priced at around a 70% probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month. FEDWATCH
There are at least 10 Fed speakers on the docket this week, and are likely to repeat their mantra of staying cautious on rates. The ISM manufacturing survey is due on Friday, as are PMIs for China.
Despite the hawkish shift, Wall Street still managed to make new highs helped by huge gains for AI diva NvidiaNVDA.O, which added $277 billion in market value last week.
“This may be a catalyst not only for the Street to get materially more bullish on U.S. Equities but also to see a further decoupling of stocks and yields since the Mag7 are proving to deliver on earnings expectations irrespective of the interest rate environment,” wrote analysts at JPMorgan in a note.
On Monday, S&P 500 futures ESc1 and Nasdaq futures NQc1 were both trading 0.2% lower. EUROSTOXX 50 futures STXEc1 and FTSE futures FFIc1 both eased 0.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.3%, having climbed 1.7% last week to seven-month highs.
Those past gains were helped in large part by a rally in Chinese stocks, which have jumped almost 10% in as many sessions on hopes for more aggressive stimulus. Blue chips .CSI300 were off 0.4% on Monday.
Japan’s Nikkei .N225 rose 0.5%, having climbed 1.6% last week to clear its previous record high as bulls look to test the 40,000 barrier.