- Indian Rupee (INR) rises as manufacturing activity expands for 5th straight month
- Headcount increased; input prices hit 8 year high
- US Dollar (USD) rises after a hawkish Fed
- US ADP payrolls, ISM Manufacturing, Fed Chair Powell to speak
The US Dollar Indian Rupee (USD/INR) exchange rate is falling on Wednesday paring gains from the previous session. The pair settled +0.08% on Tuesday at 75.09. At 10:00 UTC, USD/INR trades -0.12% at 75.00.
India’s manufacturing sector activity grew at the fastest pace in 10 months in November, boosted by robust domestic demand and despite rising costs.
The IHS Markit PMI rose to57.6 in November, up from 55.9 in October. This marked the fifth straight month that the gauge was above 50, the level which separates expansion from contraction as the easing of covid restrictions lifted demand and sales. It was also the highest level since January.
New orders rose at the fastest pace since February and firms also increased the number of employees after three straight months of reducing headcount. However, surging input costs can’t be ignored and the prices sub index was at an almost 8-year high.
Even so, the upbeat data bodes well for the economic growth outlook.
The US Dollar is trading lower versus the Rupee but is moving higher versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies trades +0.08% at the time of writing at 96.07.
The U.S. dollar is moving higher after a surprisingly hawkish turn by Federal Reserve Chair Jerome Powell. Powell told the Senate Banking Committee that the word transitory should be retired from use when referring to inflation. He added that the Fed could accelerate the pace at which bond purchases are being tapered. This would mean that the Fed start raising interest rates sooner.
Looking ahead, attention will turn to US ADP private payroll numbers ahead of Friday’s non-farm payroll report. The ISM manufacturing PMI could also offer clues into the health of the US economy. Another speech by Fed Chair Powell will also be listened to closely for further clues on the timing of the Fed’s next move.