- Indian Rupee (INR) under pressure as renewed lock downs see demand hit and the manufacturing contraction deepen
- India reports over 50,000 new covid cases for 5th straight day
- US Dollar (USD) edges higher across the board ahead of manufacturing PMI data which is expected to show continued expansion
- Congress will continue debating rescue package as deadlock on Capitol Hill continues
The US Dollar Indian Rupee (USD/INR) exchange rate is extending gains from the previous week. The pair advanced 0.2% across the previous week, closing on Friday at 74.91. At 09:45 UTC, USD/INR trades +0.2% at 75.07. This is towards the upper end of the daily traded range.
India’s slump in factory activity deepened in July as renewed lockdown restrictions applied to control the rapidly spreading coronavirus dragged on demand. The Nikkei Manufacturing Purchasing Managers’ Index fell to 46 in July, down from 47.2 in June. The level 50 separates expansion from contraction. This is the fourth straight month that the Indian manufacturing sector contracted, marking its longest stretch of contraction since 2009.
The grim figures indicate that there is a growing possibility of a sharper economic downturn in the economy. India’s economic is expected to contract at its fastest pace since 1979 this fiscal year according to a poll of economists by Reuters.
With the number of coronavirus cases still growing at a tremendous rate, the economic hit could still get worse. India reported 52,972 new daily coronavirus cases on Monday in the fifth straight day above 50,000, taking total cases to 1.8 million.
The US Dollar was staging a mild comeback versus its major peers after a steep sell off in July as fears that rising coronavirus cases could hamper the economic recovery in the world’s largest economy.
This week is a busy week for US economic data. The statistics should paint a clearer picture of how the economic recovery is progressing in America. Today attention will be on the US manufacturing sector with the release of ISM manufacturing PMI. Analyst are expecting to see an increase in activity to 54 in July, up from 52.6. Investors are cautiously optimistic as the manufacturing sector has weathered the coronavirus crisis better than the service sector.
Attention will also be on Capitol Hill where Democrats and Republicans in Congress are scheduled to hold more talks in an attempt to reach an agreement over an additional rescue package. So far deadlock remains and the clock is ticking after the additional unemployment support expired on Friday.