• Indian Rupee (INR) weakens for a 6th consecutive session
  • Factory activity declines
  • US Dollar (USD) edges lower versus major peers after strong gains
  • US jobless claims and manufacturing PMI data in focus

The US Dollar Indian Rupee (USD/INR) exchange rate is pushing higher for a sixth straight session on Thursday. The pair gained 0.09% in the previous session, settling on Wednesday at 74.36. At 12:40 UTC, USD/INR trades +0.22% lower at 74.52

The Indian Rupee is trading at a two month low hurt by US Dollar strength and a weak domestic equities market.

Domestic equities were unsupportive of the Rupee with both the Sensex and the Nifty 50 closing lower on the day.

Adding to the downbeat sentiment, Indian factory activity shrinks in June for the first time in 11 months amid lockdown restrictions imposed to contain the second covid wave. The covid restrictions triggered declines in both demand and output pushing firms to cut jobs.

The Nikkei Manufacturing PMI declined to 48.1 in June, down from May’s 50.8. The level 50 separates expansion from contraction.

The US Dollar is rising versus the Rupee but trades lower versus major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.1% at the time of writing at 92.35 snapping a six session losing run.

The US Dollar surged in the previous session following an upbeat ADP payroll report. The report revealed that 692,000 private payrolls were added in May, whilst April’s almost 1 million was downwardly revised to 886,000. Still the May number  was well ahead of the 600,000 new jobs that analysts had expected. This was a solid reading which points to a solid recovery in the US labour market. The US Dollar rose as bets rose that the Fed could move a step closer to tightening monetary policy.

Looking ahead data will remain very much in focus. The US IMS manufacturing PMI is expected to hold above 60, indicating rapid growth in the industrial sector. Investors will be watching the employment subcomponent ahead of tomorrow’s non-farm payroll as well as the paid prices index as inflation remains elevated. US jobless claims will also be in focus.