- Indian Rupee (INR) weakens as service sector PMI eases to 54.0
- Cost pressures rise, RSI remain supportive
- US Dollar (USD) rises after Janet Yellen hints at higher interest rates
- US ISM servicers PMI, ADP employment change data
The US Dollar Indian Rupee (USD/INR) exchange rate is edging higher on Wednesday after a flat close in the previous session. The pair settled just 1 pip lower in the previous session at 73.83. At 11:30 UTC, USD/INR trades +0.06% higher at 73.88.
Data today showed that growth in India’s service sector, the dominant sector in the economy, eased in April to the lowest level since January. However, the sector has remained unexpectedly resilient in light of the ongoing covid crisis in India.
The Nikkei/IHS PMI for April slipped to 54.0, down from 54.6 the previous month. Whilst this is a three month low, it is above the 50 mark separating expansion from contraction. Expectations had been for a reading of 51.1.
Rising cost pressures could be another point of concern, as they rose extremely quickly again in April. Input costs have been on the rise for 10 straight months owing to higher food and fuel prices. Yet despite rising prices the Reserve Bank of India is not expected to raise interest rates this year instead preferring to support the covid hit economy.
India’s covid cases have crossed 20 million. 11 states and regions have imposed lockdown restrictions in order to stem the spread of covid.
The US Dollar is rising versus the Rupee and its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.04% at the time of writing at 91.32 extending gains from the previous session after US treasury secretary Janet Yellen hinted towards higher interest rates.
Looking ahead, US ADP Employment data is due to be released. Analysts expect a huge increase of 872,000 new private sector jobs in April, up from 517,000 reported in March.
Meanwhile, the ISM services PMI is also expected to show a strong reading, with service sector activity accelerating further in April after a reading of 63.7 in March.
