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U.S Labor Department reported that initial claims for state unemployment benefits decreasedby1,000 to a seasonally adjusted 194,000 for the week ending February 11. 200,000 claims wereprojected by economists surveyed by Reuters for the most recent week.

The US Bureau of Labor Statistics' data, released on Thursday, showed that the Producer Price Index(PPI) for final demand in the US fell from 6.5% in December to 6% on an annual basis in January. Thisresult was higher than the 5.4% market forecast.

Fed's Bullard (non-voter) said continued rate increases would lock in slowing inflation and marketbased expectations of inflation are now relatively low. Furthermore, Bullard said he advocated a50bps hike at the last Fed meeting to get to an adequately restrictive level faster and he would notrule anything out for the next Fed meeting.

Fed's Mester (non-voter) said she saw a compelling case for a 50bp hike at the last FOMC meetingand that the Fed has more work to do to control inflation. Mester also said the Fed will need to goabove 5% and stay there for a while, while she noted how far they go with future hikes depends oninflation

Treasuries bear-steepened after hot PPI and falling jobless claims accompanied by 50bps hikechatter from Mester and Bullard.

Dollar strengthened and reclaimed the 104.00 level after firmer-than-expected PPI data, while therewere also hawkish comments from Fed officials regarding the last meeting in which Mester said shesaw a compelling case for a 50bp hike.

OUTLOOK - USDINR

While the bias remained downwards as discussed, we were not expecting sell off past 82.5 either.Expect upswings if dips extend to this region, but upsides are less likely to breach 83, with 82.77appearing as a key pivot for the day, for upswings.

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