- Indian Rupee (INR) falls despite upbeat data
- The services sector rises at a stronger pace
- US Dollar (USD) rises on safe-haven flows
- US markets closed for Labor Day
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Monday after booking losses last week. The pair fell -0.3% last week, settling on Friday at 79.71 after trading in a range of 79.28 to 80.21. At 11:00 UTC, USD/INR trades +0.20% at 79.87.
The Rupee trades lower in risk-off trade despite upbeat services PMI data, which showed that the sector grew faster than expected in August. The S&P Global services PMI rose to 57.2 last month, up from 55.5 in July, remaining well above the 50 level that separates expansion from contraction.
Strong demand and cooling cost pressures have helped the sector expand, and hiring increased at the fastest pace in over 14 years.
Strong growth in the services and manufacturing sector is expected to help India’s economy grow at its strongest annual pace in the April to June quarter. However, looking ahead, the momentum could slow in coming quarters as prices rise and the global economy slows.
The US Dollar is across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.40% at the time of writing at 109.97, building on gains from the previous week.
The US dollar is charging higher, rising to a new two-decade high on relentless safe haven demand. News that Russia has stopped gas flowing along the Nord Stream 1 pipeline to Europe has hit market sentiment hard. Riskier assets such as stocks trade out of favour while safe-haven demand surges.
The US stock market is closed for Labor Day public holiday, and there is no high impacting US data due to be released.
This week’s high light for the USD is likely to be a speech by Jerome Powell as investors look for clues as to whether the Federal Reserve will hike rates by 50 or 75 basis points in the September meeting.
Friday’s non-farm payroll helped ease expectations of an aggressive Fed as the unemployment rate rose to 3.7%, up from 3.5%.