- Rupee pares rescue package inspired gains from earlier in week
- Jerome Powell sparks risk off trading after warning of extended economic recovery
- 5 million more Americans expected to have filed for unemployment benefit
- At 11:30 UTC USD/INR +0.27% at 75.56 > Real time exchange rates
The Indian Rupee is edging lower versus the US Dollar for a second consecutive session on Thursday. The Rupee settled on Wednesday -0.4% lower at 75.36.
At 11:30 UTC, USD/INR is trading +0.27% at 75.56. This is towards the upper end of the daily traded range of 75.34 – 75.60 amid risk off trading and as investors look ahead to the US initial jobless claims data release.
The Indian Rupee received a boost at the beginning of the week after Prime Minister Narendra Modi announced a fiscal stimulus package of $266 billion to boost the economy amid the ongoing coronavirus crisis. The new financial incentives come on top of previously announced packages.
However, optimism stemming from the stimulus has been overshadowed in recent sessions by rising risk aversion in the broader financial markets. Fragile risk sentiment has taken a hit amid growing concerns over the impact of the coronavirus crisis on global economies.
Investors are selling out of riskier assets and currencies, such as the Indian Rupee, in favour of safer havens.
The Indian BSE Sensex index traded -2.77% lower, US stock markets also closed sharply lower on Wednesday. US futures are also pointing to a lower start on Wall Street today.
Adding to the risk off climate, Federal Reserve Jerome Powell also warned of a prolonged economic recovery.
Investors will now look towards US initial jobless claims data for further clues as to the damage that the coronavirus outbreak is inflicting on the US economy. This report has quickly become on the the most hotly anticipated macro data release given to its timely insight into the health of the US economy.
Analysts are expecting another 2.5 million Americans to have filed for unemployment benefits in the week ending 9th May. Whilst this is an extraordinarily high number, it is down from last week’s 3.16 million. Jobless claims have been falling steadily since the record 6.8 million reached on 28th March.
An additional 2.5 million Americans filing for unemployment benefits would take the total to 36 million since the 21st March when the coronavirus crisis started. This equates to around 25% of the entire US working population.
More recently investors have shrugged off horrifying initial jobless claims data. However, with Federal Reserve Jerome Powell’s words of warning, a weak reading today could prove too much for risk sentiment to handle.
