Rupee range-bound amid more Fed rate hike bets

The Indian rupee held a narrow range on Wednesday after a fresh set of U.S. data strengthened bets of more rate hikes by the Federal Reserve.

The rupee ended at 82.0550 to the dollar, marginally higher than 82.0250 in the previous session. The rupee in three sessions this week has been in an about 12 paisa range.

"USD/INR remains in a range on lack of any trigger.(Fed) rate hike expectations are supporting the dollar and preventing any major appreciation in rupee," Srinivas Puni, managing director at QuantArt Market Solutions, said.


"The short-term calm in rupee might continue for a few more days until the next set of (U.S.) data come through."

Other Asian currencies dropped after a slew of U.S. economic data supported expectations that the Fed is not done with its rate hike cycle.

New orders for U.S.-manufactured capital goods unexpectedly rose in May and a measure of U.S. consumer confidence rose in June to its highest level in almost one-and-a-half years.

Sales of new U.S. single-family homes too surged to the highest level in nearly 1-1/2 years in May.

"This set of data once again suggests that the Fed will likely have to hike rates further, which is obviously aligned with Jerome Powell's testimony last week," ING Bank said in a note.

Odds of Fed rate hike at the July meeting is now at 3-in-4 while investors are not expecting rate cuts till May next year.

U.S. yields rose overnight, and equities rallied. Tracking the move higher on U.S. yields, rupee forward premiums pulled back from one-month highs.

More U.S. data are due this week, with weekly jobless claims data due on Thursday and core PCE print on Friday.