- Indian Rupee (INR) strengthens on upbeat service sector data
- Rupee boosted solid service sector PMI 55.3
- US Dollar (USD) rises versus major peers on reopening optimism
- US ADP Payroll data up next
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Wednesday for a third straight day. The pair settled -0.2% lower on Tuesday at 73.25. At 12:45 UTC, USD/INR trades -0.60% at 72.81.
A strong risk on mood in the financial markets weighed on demand for the US Dollar and boosted the Indian Rupee. Global equities pushed higher on Wednesday reflecting the risk on mood.
Federal Reserve Governor Lael Brainard stuck to the Fed’s recent dovish rhetoric calming nerves over an early tightening of policy which kept demand for the US Dollar in check.
News announced by the Biden administration that the US will have enough vaccines doses for all American adults by May is also boosting the mood dragging on the safe haven USD. A deal between Johnson & Johnson and Merck will substantially expand J&J’s manufacturing capacity. Consequently, the US economy could reopen even sooner than initially expected.
Looking ahead attention will turn to the US ADP private payroll data. Analysts forecast 177,000 private payrolls will have been added in February. 174,000 private payrolls were added in January. An upbeat print could bode well for non-farm payroll numbers on Friday.
Activity in India’s dominant service sector expanded at its quickest pace in a year in February. The Nikkei/ IHS Markit Services PMI increased to 55.3 last month up from 52.8 in January. This was the highest level since pre-pandemic in February 2020. The level 50 separates expansion from contraction. The services PMI index has remained above 50 in for 5 consecutive months.
Delving deeper into the numbers, the new business orders sub index hit its highest level in 12 months. Domestic demand has been notably strong. The vaccine rollout is expected to drive these numbers higher still.