- Indian Rupee (INR) extends losses
- Indian CPI & IIP data due tomorrow
- US Dollar (USD) continues to rise steeply as treasury yields surge
- Huge US fiscal stimulus expected
The US Dollar Indian Rupee exchange rate (USD/INR) exchange rate is advancing on Monday, extending gains from the previous week. The pair closed on Friday at 73.33 after gaining 0.3% across the week. At 11:15 UTC, USD/INR trades +0.15% at 73.45.
The Indian Dollar is falling versus the strengthening US Dollar amid surging US Treasury yields. The greenback is pushing higher across the board. The US Dollar Index (DXY) which gauges the greenback versus its major peers is trading up around 1% compared to the almost three-year low hit in the previous week.
The US Dollar is extending gains after the US non-farm payroll report released on Friday missed forecasts by a dramatic margin.
The jobs market report from the US Labour department revealed that -140,000 job were lost in December. This was significantly lower than the 71,000 job gains that analysts had been expecting. This was the first decline in jobs since April. The unemployment rate remained unchanged at 6.7%, below the 6.8% forecast.
The very soft data combined with an all-Democratic government has boosted expectations of a huge covid fiscal relief package. Biden has said that he will set out proposals this week for trillions of dollars in fiscal support to fight the economic fallout of the pandemic.
Investors are now starting to price in economic recovery spurring inflation on the black of trillions in extra covid relief spending from Joe Biden.
Indian equities are bounding higher, outperforming developed and emerging markets owing to the positive sentiment surrounding India’s covid vaccine rollout which will begin 16th January.
With regards to the economic calendar, the focus this week will be on India’s CPI inflation data and IIP data both of which are released on Tuesday.
The is no high impacting US data due to be released today. US inflation data is due on Wednesday.