- Indian Rupee (INR) rises as service sector expands
- Domestic demand for services remains strong
- US Dollar (USD) gains versus major peers tracing bond yields higher
- US ISM services PMI due
The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower on Tuesday after strong gains in the previous session. The pair settled +0.59% on Monday at 74.56. At 11:30 UTC, USD/INR trades down -0.08% at 74.51.
Activity in India’s service sector expanded for a second straight month in September. Improved domestic demands coupled with easing covid restrictions prompted Indian businesses to hire more people for the first time in almost a year.
The IHS services PMI came in at 55.2 in September, just slightly off August’s 18 month high of 56.7. However, it was still well above the level 50 which separates growth from contraction. In an encouraging sign the new business sub-index also expanded for a second consecutive month. Domestic demand was strong. However, international demand remained subdued.
The US Dollar is trading lower versus the Rupee. However, it is edging higher versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.15% at the time of writing at 93.95.
The US Dollar is on the rise, tracing US treasury yields higher. The benchmark US 10-year treasury yield trades over 1.5% higher so far this week, although remain off last week’s three month high of 1.56%.
The US Dollar has been boosted by rising bond yields as investors fret over the lack of progress in Washington over raising the US debt ceiling and as investors raise expectations of a move by the Fed to taper bond purchases potentially next month.
All eyes are on the US non farm payroll data on Friday to assess the likelihood of the Fed making a move. It would take a very poor reading for the Fed not to move.
Today ISM services PMI data is under the spotlight. Expectations are for a slight slowing to growth to 59.8 in September, down from 61.7.