- Indian Rupee (INR) trends lower after service sector PMI 49.8 in September
- Firms continue to lay off staff for the longest monthly run on record
- US Dollar (USD) steady as Trump recovers from Covid
- US stimulus optimism remains
The US Dollar Indian Rupee (USD/INR) is pushing higher on Tuesday, paring losses from the previous session. The pair settled -0.25% lower on Monday at 73.11. At 10:15 UTC, USD/INR trades 0.4% higher at 73.42 after hitting a 3-day high of 73.51.
Data revealed that the deep contraction in the Indian service sector eased considerably in September as the government continued easing lockdown restrictions. However, the jobs component of the same report was more than concerning.
The Nikki/ IHS Markit Services PMI rebounded to 49.8 in September from August’s 41.8. The level 50 separates expansion from contraction. September marked the 7th straight month that activity in the service sector contracted, in the longest run since a 10 month stretch back in 2014.
Delving deeper into the numbers, domestic and foreign demand remained in contraction territory which has led firms to reduce the head count again. The employment sub-component of the report showed that firms cut jobs for a seventh straight month, the longest on record.
The data comes after numbers last Thursday revealed that the manufacturing sector expanded at its fastest pace in over 8 years. The data indicates that the Indian economy and business conditions were gradually normalising.
Meanwhile the root cause of the economic slowdown, the covid pandemic is showing no signs of slowing in India. The total number of covid cases in India rose to 6.69 million after cases rose by 61,267 over the last 24 hours.
Whilst the US Dollar was pushing ahead versus the Indian Rupee, it was trading mildly lower versus its major peers. News that President Trump had been discharged from the Walter Reed Medical Centre where he was receiving treatment for Covid lifted the mood in the market. Optimism surrounding additional US stimulus is also keeping the US Dollar muted.