- Indian Rupee (INR) falls snapping two days of gains
- Concerns linger over covid cases as festival season approaches
- US Dollar (USD) rallied on Wednesday on hawkish Fed speak
- US initial jobless claims in focus
The US Dollar Indian Rupee (USD/INR) exchange rate is higher after two straight days of losses. The pair settled lower on Wednesday -0.13% at 74.18. At 11:00 UTC, USD/INR trades +0.04% higher at 74.18.
The Rupee is edging lower amid rising concerns over a third wave of COVID in India. The Indian government has asked state authorities to impose strict restrictions ahead of festivals which are considered super spreader events. India continues to report between 30,000 – 40,000 new covid cases a day however, authorities fear festival season could result in a spike in cases.
Separately, domestic equities continued to push higher. The Sensex hit a fresh record high and is set to gain over 2.5% so far this week.
Softer oil prices are offering support to the Rupee. Oil trades down 7.5% so far this week as covid cases rise in both US and China, the two largest consumers of oil.
The US Dollar trading higher versus the Rupee but lower versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.04% at 92.24 after strong gains in the previous session.
The US Dollar jumped higher on Wednesday following a record ISM service sector PMI and hawkish comments from Federal Reserve official Richard Clarida. Clarida said that he was in favour of the Fed announcing this year that it will start tapering its bond purchase programme. He added that he considered that the necessary conditions to raise interest rates will be met by the end of 2022 paving the way for a rate hike.
Attention will now turn to US initial jobless claims which are expected to 384,000 Americans signed up for unemployment benefits last week, this is down slightly from 400,000 the previous week. The data comes after ADP employment numbers yesterday showed that just 330k news jobs were created in the US in July, half what analysts were forecasting.