MUMBAI: The Indian rupee is poised to open nearly flat on Tuesday, ahead of U.S. inflation data that would help in gauging when the Federal Reserve would deliver its first interest rate cut.

Non-deliverable forwards indicate rupee will likely open barely changed from 83.0025 in the previous session. The local currency on Monday was in a narrow 4 paisa range around the 83 handle.

“Markets just do not know what direction to take right now. The bias is more or less neutral,” a forex trader at a bank said.

“I am just hoping that the U.S. inflation data has something to take care of this indecisiveness around 83.”

Indian rupee inches up in muted early trade; awaits inflation data, Fedspeak

The U.S. January inflation data, out later in the day, is expected to show consumer prices rose by 0.2% month-on-month, while the more important core measure increased 0.3%. On a year-on-year basis, headline inflation is expected to fall to 2.9% from 3.4% and core is expected to decline to 3.7% from 3.9%.

The data follows the upbeat U.S. monthly jobs report that prompted investors to dial back expectations on the Fed rate cuts. The U.S. central bank is now highly unlikely to cut rates at the March meeting and rate cuts prices in for 2024 are down to 110 basis points.

At the beginning of January, investors had priced in 170 bps of cuts in 2024.

“Fed officials are willing to cut on confidence that inflation is reaching and can sustain the 2.0% goal,” Societe Generale said in a note. “The CPI update for January could bolster or weaken Fed confidence on the inflation outlook.”

The dollar index was slightly higher while Asian currencies were mixed.