- Indian Rupee (INR) falls further on Monday
- China manufacturing PMI slipped to 50.6
- US Dollar (USD) extends gains into a 12th week
- US ISM manufacturing data is due
The US Dollar Indian Rupee (USD/INR) exchange rate is rising, adding to gains from last week. The pair rose +0.17% in the previous week, settling on Friday at 83.03. At 10:30 UTC, USD/INR trades +0.19% at 83.19 and trades in a range of 83.03 to 83.21.
The Rupee is moving lower as investors digest the latest data from China. China’s factory activity expanded at a slower pace in September owing to sluggish external demand.
The China Caixin/ S&P global manufacturing PMI fell to 50.6 last month from 51 in August. This was below analysis’ forecasts of 51.2 and but above the level 50 which separates growth from contraction.
The world’s second largest economy is showing some signs of stabilising after sluggish growth earlier in the year. However the outlook for Asia’s largest economy is unclear owing to the property slump and falling exports.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.14% at the time of writing at 106.40, extending gains from the previous week.
The US dollar is pushing higher at the start of the week extending gains from its best quarterly performance in a year in the third quarter. The US dollar index is extending gains into a at 12th straight week supported by a persistently hawkish Federal Reserve and a surge in US treasury yields.
US 10-year treasury yields rose again on Monday hitting a peak of 4.619% at the time of writing close to its 17 year high of 4.688% reached last week.
Over the weekend US Congress passed a stopgap funding bill in order to avoid the federal government from shutting down.
Looking ahead attention is on US manufacturing ISM data which is expected to show that activity in the sector contracted to 47.7 in September up very slightly from 47.6 in August.
Attention will now turn to Federal Reserve chair Jerome Powell who is due to speak and could shed more light on the future path for rates. At the September FOMC meeting the Fed indicated that it would raise interest rates again before the end of the year and ease less next year. However the market is not convinced and is pricing in a 45% probability of another rate hike this year.
