- Indian Rupee (INR) falls but set for weekly gains
- Indian service sector activity surged in August
- US Dollar (USD) trades around 1 month low ahead of NFP
- NFP could give clues on timing of Fed’s next move
The US Dollar Indian Rupee (USD/INR) exchange rate is edging higher on Friday after a flat close in the previous session. The pair at 72.99 on Thursday the same level that it started the session at. At 11:30 UTC, USD/INR trades +0.07% higher at 73.04. The pair is set to lose 0.6% across the week.
The India Rupee is edging lower despite data revealing that the service sector in the Indian economy grew at the fastest pace since the pandemic began, as businesses reopened following the second covid wave and amid improving vaccination rates.
The HIS services PMI rose to 56.7 in August its strongest pace since the pandemic started in March 2020. The level 509 separates growth from contraction. The PMI was at 45.4 in July having been below 50 for 3 months. Optimism surrounding the economic outlook is improving although the employment subcomponent remained in contraction territory.
The US Dollar is strengthening against the Rupee. However, it is holding steady against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades flat at the time of writing at 92.23 after steep losses across the week. The Index is set to lose 0.5% this week.
The US Dollar is holding steady on Friday around 1 month lows as investors look ahead to the US non farm payroll report. The labour market report is always a closely watched report. However following Federal Reserve Chair Jerome Powell’s comments at the Jackson Hole summit last week the jobs report will be even more in focus given its potential impact on Federal Reserve monetary policy.
Fe Chair Jerome Powell made the recovery of the labour market a key condition for starting to withdraw monetary policy.
Expectations are for job growth to slow to 750,000 jobs added in August down from 943,000 in July. A weak reading could push back Fed tapering expectations and drag the US Dollar lower.