- Indian Rupee (INR) advances as lock down measures are set to be relaxed further in August despite daily covid cases hitting 50,000
- Oil drops 2% on weaker demand fears
- US Dollar (USD) trades higher versus major peers ahead of US GDP & jobless claims
- US Federal Reserve kept monetary policy unchanged but stands ready to use all the tools it has, if necessary
The US Dollar Indian Rupee (USD/INR) exchange rate is slipping lower on Thursday, snapping a three-day winning streak. The pair settled +0.05% higher at 74.94 in the previous session. Today, at 11:00 UTC, USD/INR is trading -0.1% 74.87.
A night-time curfew will end, and gyms will reopen as from August in India as lockdown restrictions are eased further. However, cinemas, bars and schools will remain closed as India’s new daily covid cases top 50,000 for the first time. The total number of cases has now passed 1.5 million, putting Indian as the world’s third most infected country.
India has gradually eased its strict lockdown measures in a bid to revive its flagging economy, even as the number of new cases reaches record levels. Some states, however, are re-imposing lockdown conditions in an attempt to stem the spread of the covid-19 virus.
Whilst rising covid cases are negative for the Rupee, the Indian currency is receiving support from swelling foreign currency reserves and falling oil prices.
Oil is trading almost 2% lower amid fears that crude consumption will fall again as the number of coronavirus cases surge across the globe. Cases are on the rise not just in India but also in Australia, China and America to name a few countries.
The US Dollar is trading lower versus the Rupee but is advancing versus its major peers as investors look ahead to US GDP reading and jobless claims.
Analysts are expecting a pretty ugly reading as lockdown measures slowed consumer spending to and business investment significantly. Expectations are for the US economy to have contracted -34.2% on an annual basis in the second quarter of the year. This will be the deepest contraction recorded since World War 2. A weaker than forecast number could send the US Dollar tanking lower.
US initial jobless claims are also expected to increase from last week as the recovery in the labour markets stutters for a second week.
These readings come after the Federal Reserve warned that the US economy faced mounting challenges. The Fed made no changes to policy but pledged to use its full range of tools if needed.