- Indian Rupee (INR) rises, RBI sees inflation cooling
- Indian manufacturing & industrial production data due
- US Dollar (USD) set for weekly gains on Fed expectations
- US PPI data up next
The US Dollar Indian Rupee (USD/INR) exchange rate is extending loses on Friday for a second straight session. The pair settled -0.34% lower on Thursday at 73.52. At 11:30 UTC, USD/INR trades -0.12% lower at 73.43. The pair is set to gain 0.6% across the week.
The Rupee is gaining ground despite expectations by the Reserve Bank of India that retail inflation will cool. The central bank governor Shakitikanta Das said that the central bank now expects inflation to gradually moderate helped by improving supplies as pandemic restrictions are lifted.
The minutes to the latest RBI meeting revealed that the central bank considers an accommodative policy necessary in order to support the economy.
Data wise, investors will be watching for manufacturing and industrial production numbers which are due. Analysts are expecting a slowdown in output to 11% and 10.5% respectively.
The US Dollar is easing lower across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies trades -0.07% at the time of writing at 92.47 although is set for weekly gains of 0.46%.
The US Dollar is on track to book a weekly win as investors reassess the likelihood of the Federal Reserve tapering bond purchases and as concerns grow over the health of the economic recovery.
Last week’s US non farm payrolls were considerably weaker than expected, pushing back Fed tapering expectations. However, since then the JOLTS job openings showed that there are 10 million unfilled vacancies and initial jobless claims fell to the lowest level since the start of the pandemic. As a result, expectations of a move by the Fed are creeping higher.
Today attention is on the economic calendar with the release of PPI inflation. Expectations are for inflation at wholesale level to rise 0.6% month on month in August after rising 1% in July.