The Rupee closed weaker than its opening to the USD as the dollar index plunged to a three-month low after US consumer spending rose in October, while inflation moderated. US consumer spending, which accounts for more than two-thirds of US economic activity, rose to 0.8% in October compared to 0.6% in September while inflation moderated in the US, giving much needed relief to the economy. Crude oil price rose as China eased COVID restrictions in two major cities, which fuelled hopes of reopening of Chinese economy, thus, boosting the demand outlook for crude oil. Meanwhile, the European Union agreed to $60 per barrel price cap on Russian oil, however, the decision is yet to be approved officially. The premium on the one-year dollar/rupee forwards is likely to rise, tracking a sharp fall in US yields.......
The dollar index fell sharply after Fed chair Jerome Powell hinted at a slower pace of rate hikes going forward. The index fell over 5% in November, its largest monthly percentage decline since July 2010. Equities around the world surged after US Federal Reserve Chair Jerome Powell's speech overnight, which suggested that the US central bank may slow down the pace of its rate hikes as soon as this month. "It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said. "The time for moderating the pace of rate increases may come as soon as the December meeting."......