Rupee to get relief on dollar retreat after U.S. jobs data
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The Indian rupee, coming off its worst weekly performance in over a month, is expected to recover on Monday, helped by the decline in the dollar index and near-maturity Treasury yields after U.S. payrolls rose less than expected.
Non-deliverable forwards indicate the rupee will open at around 82.60-82.62 to the U.S. dollar, compared with 82.74 in the previous session.
Last week, the rupee was roiled by concerns that U.S. rates may need to rise more than what is priced after private payrolls increased more than expected in June.
However, data late on Friday showed that non-farm payrolls rose by 209,000 jobs last month, below the 225,000 expected by economists. Further, job additions for April and May were revised lower.
Compared to private payrolls data, the non-farm payrolls number will be quite a relief for the rupee and other Asian currencies, a forex trader said.
"With the jobs data behind us, it's now about the (U.S.) inflation data. A move to 83 remains well in play."
The dollar index dropped 0.9% on Friday, its worst session in almost four months, after the payrolls data showed the U.S. economy added the fewest jobs in 2-1/2 years in June, while the 2-year U.S. yields slipped back under 5%.
The jobs data, however, did not impact expectations that the U.S. Federal Reserve will, almost certainly raise rates by 25 basis points (bps) at its July 25-26 meeting.
That 25 bps-rate hike is on the cards, with June inflation data likely to "come in hotter than the Fed would like", ANZ Research said in a note.
U.S. inflation data is due on Wednesday. Economists polled by Reuters expect core CPI rose 0.3% month-on-month and 5% on-year.
KEY INDICATORS
** One-month non-deliverable rupee forward at 82.71; onshore one-month forward premium at 8 paisa
** USD/INR NSE July futures settled at 82.7850 on Friday
** USD/INR July forward premium at 5.5 paisa
** Dollar index at 102.40
** Brent crude futures down 0.4% at $78.1 per barrel
** Ten-year U.S. note yield at 4.08%; 2-year at 4.94%
** As per NSDL data, foreign investors bought a net $343.6 million worth of Indian shares on July 6
** NSDL data shows foreign investors bought a net $87.8 million worth of Indian bonds on July 6
