- Indian Rupee (INR) falls even as the service sector recovers
- Services PMI rises to 59.2
- US Dollar (USD) rises after the long weekend
- US factory orders expected to rise
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Tuesday after a subdued session yesterday. The pair settled -0.05% lower on Monday at 79.15. At 11:00 UTC, USD/INR trades +0.31% at 79.15.
The Rupee is falling in risk-off trade as global indices fall lower, and the USD surges. The Rupee trades at a record low despite encouraging data.
India’s dominant services sector expanded at the quickest rate in over a decade in June, boosted by strong demand and despite prices surging.
The S&P Global services PMI rose to 59.2 in June from 58.9 in May, marking its highest level since April 2011. The level 50 separates expansion from contraction. Analysts had forecast a drop to 58.7.
Demand was strong with new orders above the break-even level for an 11th straight month. Cost inflation also remained elevated.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.53% at the time of writing at 105.68 after trading flat yesterday.
The USD is surging higher on Tuesday as the US returns from the long Independence Day weekend as it approaches its highest level in almost 20 years.
The USD is rising on reports that President Biden’s administration is planning to roll back some tariffs on Chine imports in an effort to reduce inflationary pressures.
Inflation remains a key concern for the market, overnight the RBA hiked interest rates by 50 basis points, marking the first time in history that the central bank has raised by 50 basis points to two meetings continuously and highlights global fears over surging inflation.
Today the economic calendar is relatively quiet with factory orders expected to show a 0.5% increase month on month.
Tomorrow all eyes will be on the release of the minutes from the June Federal Reserve monetary policy meeting. Investors will be watching for more hawkish signals in the minutes.
