- Indian Rupee (INR) traces domestic equities higher
- India services sector PMI falls to 41.2
- US Dollar (USD) slips in quiet trade on public holiday.
- US FOMC minutes in focus on Wednesday.
The US Dollar Indian Rupee (USD/INR) exchange rate is extending losses for a second straight session on Monday. The pair gained 0.4% across the previous week, settling on Friday at 74.51. At 11:40 UTC, USD/INR trades -0.35% lower at 74.28.
The Rupee is tracing domestic equities higher, shrugging off rising oil prices and a marked slowdown in the dominant services industry.
Activity in the services industry contracted sharply in June as tighter restrictions were imposed to contain the spread of the second wave of covid. The lockdown restrictions hit demand and forced firms to shed jobs at a rapid rate.
The IHS Markit Services PMI Index dived to 41.2 last month, down from an already weak 46.4 in May. The June reading was the lowest PMI reading since July 2020, amid the first covid lockdown. The reading 50 separates expansion from contraction.
Firms have now reduced headcount for seven straight months as the job crisis has steadily worsened and could well continue to worsen over coming months.
The US Dollar is slipping lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.09% at the time of writing at 92.15 as it continues to fall away from recent 2-month highs.
The US Dollar continues to edge lower extending losses from Friday following the US non farm payroll report. The closely watched report revealed that the US saw 850,000 new jobs created in June. This was ahead of forecasts. However, unemployment also ticked higher. The data dampened the prospects of the Fed moving sooner to tighten monetary policy, pulling the greenback lower.
Today is a public holiday in the US with the stocks market closed in observance of the 4th July Independence Day holiday so volumes in the US Dollar market are likely to be low.
There is no high impacting US data due today. Investors will be looking ahead to the release of the minutes from the latest Fed meeting later in the week for further clues on the timeline for tightening monetary policy.
