The Euro (EUR) and Indian Rupee (INR) both traded cautiously against the US Dollar (USD) on Wednesday, as investors awaited the release of the United States Consumer Price Index (CPI) data for July, scheduled for 12:30 GMT [1][2]. The EUR/USD pair edged down to around 1.1534 at the start of the European session, while the US Dollar Index (DXY) traded slightly higher near 99.90 [1]. Similarly, the USD/INR pair traded higher near 95.45, reflecting continued pressure on the Rupee due to surging oil prices [2].
Both articles highlight that restricted energy supply, particularly through the Strait of Hormuz and Bab al-Mandab Strait, has led to a boost in global oil prices [1][2]. According to Kpler data cited in Source 2, shipping traffic through the Strait of Hormuz dropped to just six vessels on August 10, compared to a recent 10-day average of about 11 and a pre-war daily average of 130-140 ships, as reported by Reuters [2]. This supply disruption has negatively impacted currencies of economies reliant on energy imports, such as the Eurozone and India [1][2].
Market participants are closely watching the upcoming US CPI data, with estimates suggesting headline CPI grew at an annual pace of 3.4% in July, down from 3.5% in June, and core CPI at 2.5% YoY, down from 2.6% previously [1]. On a monthly basis, headline and core inflation are expected to have grown by 0.1% and 0.2%, respectively [1]. Signs of cooling price pressures could ease fears of further Federal Reserve (Fed) interest rate hikes, especially after weak US Nonfarm Payrolls (NFP) figures for July, which showed a decline of 23,000 jobs and negative revisions subtracting 103,000 jobs from May and June, according to TD Securities [1].
In India, retail CPI data is also awaited, with economists at DBS Group Research expecting headline inflation in July to remain steady at 4.4% YoY, and core inflation to stay benign at below 4% [2]. Adjustments in domestic retail fuel products, such as a 10% YoY increase in non-subsidized LPG in July, are likely to be reflected in the utilities and fuel segments [2]. Meanwhile, remarks from Fed Chairman Kevin Warsh in the July policy meeting indicated ongoing concerns about inflationary pressures remaining above the central bank’s 2% target [2].
Geopolitical developments are also being monitored, with Pakistan’s Defence Minister expressing optimism about progress in negotiations between the US and Iran, which could potentially impact energy supply routes and prices [2].
CONCLUSION
Both the Euro and Indian Rupee are under pressure against the US Dollar as markets await key US and Indian CPI data, with surging oil prices and geopolitical tensions adding to volatility. The outcome of the US inflation report is expected to significantly influence Federal Reserve policy expectations and global currency movements. Market sentiment remains cautious amid ongoing energy supply disruptions and labor market concerns.