Rupee to weigh robust US activity data, support at 82.25/USD
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The Indian rupee is likely to open little changed to the U.S. currency on Monday, amid upbeat U.S. data and expectations that the local currency will manage to hold a near-term support level.
Non-deliverable forwards indicate the rupee will open nearly unchanged to the previous session's level of 82.09. The local currency declined last week, halting a four week winning streak and was in a 81.88 to 82.25 range.
"You have to count on a 82 to 82.25 range, at least to begin the week. It's only next week that we can count on a bit more volatility with Fed meeting and U.S. jobs data due," a spot trader at a Mumbai-based bank said.
With Asian currencies mostly lower, there should a slight upward bias on USD/INR, but there is little risk to 82.25, he said.
Asian currencies were on the defensive after a survey on Friday indicated that U.S. business activity accelerated to an 11-month high in April.
S&P said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month, its highest level since last May and following a final reading of 52.3 in March.
The data to an extent alleviated concerns over the U.S. economic outlook.
"The U.S data may have dampened thoughts about Fed rate cuts later this year," ING Bank said in a note.
The Fed is almost certain to raise rates by 25 basis points next week, and odds of another rate hike in June have inched up over the last few days.
There is a slew of data this week to help investors assess the likely direction for U.S. rates. U.S. advance Q1 GDP, consumer confidence, the PCE price index, employment cost index, durable goods, University of Michigan consumer sentiment, and a swath of housing data are due.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.16; onshore one-month forward premium at 11.5 paisa ** USD/INR NSE April futures settled on Friday at 82.0950 ** USD/INR April forward premium at about 1 paisa ** Dollar index up at 101.74 ** Brent crude futures down 0.8% at $81 per barrel ** Ten-year U.S. note yield at 3.56% ** SGX Nifty nearest-month futures up 0.3% at 17,690 ** As per NSDL data, foreign investors sold a net $117.8 mln worth of Indian shares on April 20
** NSDL data shows foreign investors bought a net $187.3 mln worth of Indian bonds on April 20
