- Indian Rupee (INR) edges higher amid upbeat manufacturing data
- Manufacturing PMI rebounds in July
- US Dollar (USD) extends losses from last week
- US ISM manufacturing PMI in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is heading higher at the start of the week, pairing losses from the previous week. The pair slumped -0.12% last week, settling on Friday at 74.33. At 12:30 UTC, USD/INR trades +0.04% higher at 74.35.
India’s manufacturing sector rebounded in July as the economy continued to recover from the second covid wave. After contracting for the first time in 11 months in June the IHS Markit Manufacturing PMI moved back above the key 50 level which separates expansion from contraction in July. The index printed at 55.3, up from 48.1 in June.
The subcomponents of the report were encouraging across the board with output, new orders, exports and employment all showing gains. There was also a sharp increase in input costs. However, these were broadly absorbed by companies amid efforts to boost sales.
Despite the pick up in activity And input costs, the Reserve Bank of India is expected to keep interest rates on hold in August in a bid to support growth further.
The US Dollar is trading lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.2% at 91.97 extending losses from the previous week.
The US Dollar lost -0.8% in the previous week as it moved further away from its 3.5 month high whilst recording its worst weekly performance since May. The greenback weakened after the Fed reiterated that it was in no hurry to raise interest rates or tighten monetary policy.
Investors are looking ahead to the US non-farm payroll report which is due on Friday for further clues as to the health of the US labour market. This will be the last major jobs report ahead of the Jackson Hole summit at the end of August.
Today investors will look to the release of the US ISM manufacturing PMI which is expected to tick higher in July to 60.9 up from 60.6 in June.