Forex Today: US Dollar Pauses as Markets Eye Inflation Data – Implications for India
The US Dollar (USD), after a strong two-day rally, has entered a consolidation phase, holding below 98.50 on the US Dollar Index (DXY). Global traders are now closely watching the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred gauge of inflation, scheduled for release later today.
While the US Dollar’s movements dominate headlines globally, the ripple effects are very real for India’s economy, currency, exporters, importers, and even investors.
📊 Weekly Performance: US Dollar vs Major Currencies
The USD strengthened broadly this week, showing significant gains against the New Zealand Dollar (NZD) and Japanese Yen (JPY).
| Currency | Weekly % Change vs USD |
|---|---|
| EUR | -0.57% |
| GBP | -0.80% |
| JPY | -1.27% |
| CAD | -1.17% |
| AUD | -0.98% |
| NZD | -1.75% |
| CHF | -0.56% |
Note: Positive USD% indicates USD strength against the respective currency.
Key Factors Driving the Dollar
Strong US Economic Data:
Durable Goods Orders rose 2.9% in August.
Q2 GDP revised to 3.8% from 3.3%.
Weekly Jobless Claims fell to 218,000, signaling a healthy labor market.
US Trade Policies:
President Trump announced tariffs effective October 1:
100% on branded pharmaceuticals
50% on kitchen cabinets & vanities
25% on trucks
Global Market Updates:
Japan’s CPI rose 2.5% YoY, in line with expectations.
USD/JPY trades below 150, up nearly 1.5% this week.
Currency & Commodity Highlights
EUR/USD: Under pressure, trading below 1.1700.
GBP/USD: Slight recovery near 1.3350 after a 0.8% drop.
Gold (XAU/USD): Consolidating below $3,750, lacking clear direction.
What This Means for India
The USD’s movements have a direct impact on India:
INR Volatility:
A stronger USD tends to weaken the Indian Rupee, affecting imports and inflation.
Import Costs:
Oil, electronics, and other imports become costlier → fuel prices may rise, leading to higher general inflation.
Export Opportunities:
Indian exporters in IT, Pharma, and Textiles benefit from a stronger USD, earning more when converting to INR.
Stock Market Effects:
Foreign investors may reduce exposure to Indian equities → short-term volatility in Sensex and Nifty.
Pharma Sector Watch:
US tariffs on pharmaceuticals could impact Indian exporters, requiring strategic adjustments.