- Indian Rupee (INR) rises and is set to rise this week
- GDP could be revised higher to 7%
- US Dollar (USD) rises versus major peers
- NFP is expected to see 150k jobs added
The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a second straight day. The pair fell 0.05% in the previous session, settling on Thursday at 83.24. At 17:00 UTC, USD/INR trades -0.11% at 83.15 and trades in a range of 82.12 to 83.28. The pair is set for a weekly loss of -0.06%
The Indian rupee is rising despite the risk of mood in the broader market. I know expectations that central banks may not be able to cut interest rates as aggressively as originally hoped this year.
Instead, optimism is coming through amid expectations that India will project client economic growth estimates of around 7% for the fiscal year 20/23/24, which ends in March. This would be up from the previous estimate of 6.5%.
Prime Minister Narendra Modi has increased state spending on infrastructure projects in order to boost economic growth amid slowing consumer spending, and his moves could help him win a third time in elections scheduled before May.
The US Dollar is falling against the Rupee but is rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.3% at the time of writing at 102.74 and is on track to book gains across the week.
The U.S. dollar is rising against its major peers and is on track for its steepest weekly rise since May as investors look ahead to the US nonfarm payroll report.
Economist expects 150k jobs to have been created in December, slightly down from the 199k created it November. Meanwhile, the unemployment rate is expected to tick higher to 3.9%, up from 3.8% previously.
Data this week, including the ADP private payroll report US jobless claims and challenger job cuts, as well as the employment sub-section of the ISM manufacturing PMI report, have been stronger than expected, pointing to a beat in the December NFP report.
The data comes as the market has been dialing back expectations of aggressive federal reserve interest rate cuts this year.
According to the CME FedWatch tool, the market is pricing in around a 60% probability of a rate cut in March, which is down from almost 100% in December last year.
A stronger NFP report could see the odds of a March rate cut fall to 50/50, boosting the US dollar.