- Indian Rupee (INR) is falling for a second day
- The Indian business activity grew at the fastest pace in 4-month
- US Dollar (USD) is falling against its peers
- USD fall amid a surging yen
The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second straight day. The pair rose 0.04% in the previous session, settling on Tuesday at 83.70. At 19:00 UTC, USD/INR trades 0.06% at 83.72 and is in a range of 83.68 to 83.74.
India’s business activity accelerated at its quickest pace in three months in July amid strong demand, particularly in the service sector.
HSBC’s flash composite PMI, compiled by S&P Global, rose to 61.4 in July, up from the 60.9 level in June, marking three years of expansion.
The expansion was led by the service sector, where the PMI rose to a four-month high of 61.1, up from 60.5 in June. Meanwhile, growth in manufacturing was also robust with the PMI increasing from 58.3 to 58.5, its highest level since April.
Job creation rose at its fastest pace since April 2006, supporting business confidence at the start of the third quarter, which had eased to a 7-month low in June.
The US Dollar is rising against the Rupee but falling versus major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.14% at the time of writing at 104.30, after gains in the previous session.
The US dollar is falling against its major peers, driven mainly by the surge in the Japanese yen. The yen has rallied over 1%, sparking speculation of further intervention from Japanese authorities ahead of the Bank of Japan’s interest rate decision next week.
Next week, the Japanese central bank could hike interest rates by 10 basis points at a time when the market is pricing in a 25-basis-point cut from the Federal Reserve, resulting in some unwinding of the carry trade.
Meanwhile, U.S. economic data is a mixed bag. The composite PMI, which is considered a good gauge of business activity, rose modestly to 55 in July from 54.8. However, delving deeper into the numbers, an unexpected increase in service sector activity to 56 from 55 offset an unexpected contraction in manufacturing, where the PMI fell to 49.5
The data comes ahead of US Q2 GDP figures tomorrow, which are expected to show annualized growth of 2% in the second quarter, up from 1.4% in the first quarter.