inr-bank-notes - INR
  • Indian Rupee advances on hopes of an easing of tensions between China & India
  • USD holding gains versus majors ahead of NFP
  • 4 million jobs expected in August vs 1.76 expected

The US Dollar Indian Rupee (USD/INR) is trading lower snapping two day of gains. The pair settled on Thursday +0.17% at 73.38. At 12:00 UTC, USD/INR trades -0.3% at 73.17. After falling -2.4% across the previous week, the pair is set to gain 0.1% across this week.

Indian and Chinese defence ministers are due to meet in Russia to discuss the disputed border which has caused political tensions to rise in recent months. Following a brutal border clash in June, tensions have remained elevated. Whilst diplomats and military commanders have held talks, little progress has been made. Hopes are growing that talks in Russia will at least calm the situation.

On the domestic equity market, the Sensex and the Nifty 50 both slipped lower. Foreign institutional investors were net buyers in the capital markets offering support to the Rupee.

The US Dollar is trading lower versus the Rupee but is holding onto gains versus its major peers ahead of the US jobs report. Analysts are forecasting 1.4 million new hires in the US in August. This would be down from the 1.76 million jobs created in July, indicating that the recovery is slowing. Analysts are also expecting the unemployment rate will decline to 9.8%, down from 10.2%. Average wage growth is also expected to ease back to 4.5%, down from 4.8% suggesting that more lower income earners are returning to the workforce. This was the sector of the workforce hardest hit by cuts in the peak of the crisis.

The lead indicators for the jobs report, release this week have pointed to a weaker report. The employment component of the ISM manufacturing and non-manufacturing reports shrank, albeit at a slower pace. The closely correlated ADP private payrolls report also missed analysts expectations of 950,000 jobs, instead reporting just 428,000 new jobs. Together these reports point to a weaker headline figure today. If this were the case, it could drag on the value of the US Dollar.