MUMBAI, July 10 (Reuters) - The Indian rupee will likely open flat to the U.S. dollar on Wednesday after the Federal Reserve Chair warned against cutting interest rates too early.
Non-deliverable forwards indicate the rupee will open mostly unchanged from 83.4850 in the previous session. Asian currencies were muted following Jerome Powell's comments. "Powell's comments provided no additional information in a way. That you can make out on Fed rates have not changed at all," a currency trader at a bank said.
The rupee "will continue its familiar rangebound ways" with U.S. inflation data, due on Thursday, acting as the next key trigger, he said.
Fed Chair Jerome Powell in his testimony to U.S. lawmakers on Tuesday said that while inflation has eased in recent months, a rate cut is not appropriate until the central bank has "greater confidence" that it is headed towards the 2% target.
"Powell’s comments sought to maintain a neutral stance," and stuck a balanced tone, ANZ Bank said in a note.
The bank said there were subtle nuances in the assessment, particularly referring to Powell's comment that elevated inflation is not the only risk the economy faces, which it said implies a focus on weakening activity and labour market conditions.
Recent U.S. activity data has been broadly softer than expected, and there are tentative signs that the jobs market may be cooling, with the unemployment rate inching up to a 2-1/2-year high.
Futures are pricing in two rate cuts by the Fed this year, unchanged from prior to Powell's testimony.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.55; onshore one-month forward premium at 7.25 paise ** Dollar index at 105.12 ** Brent crude futures down 0.1% at $84.6 per barrel ** Ten-year U.S. note yield at 4.31% ** As per NSDL data, foreign investors bought a net $19.4mln worth of Indian shares on Jul. 8
** NSDL data shows foreign investors sold a net $28.7mln worth of Indian bonds on Jul. 8
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
