Rupee to focus on US data after index flows underwhelm
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The Indian rupee is expected to open largely unchanged on Monday, mixed Asian peers were mixed, with the focus on important U.S. data due later in the week.
Non-deliverable forwards indicated rupee will open barely changed from the previous session's close of 83.3825. Asian currencies were rangebound and lacked direction while the dollar index dipped.
Last week was a choppy one for the rupee, with the inclusion of Indian bonds into the JPMorgan emerging market index and the expiry of the June currency futures. The local currency held a range of 83.36-83.61.
Foreign investors purchased 16.54 billion rupees ($198.4 million) of Indian bonds on a net basis under the Fully Accessible Route on Friday, the day of the inclusion, considerably lower than what bankers had expected.
"Now that the positions related to the inclusion are done, we move back to tracking the dollar and U.S. yields," a currency trader at a bank said.
"Largely, I think we are in a 83.30-83.60 range with risks on the higher side (for dollar/rupee)."
Key U.S. data is due this week, beginning with the U.S. ISM manufacturing numbers later in the day. The ISM Services data will be out on Wednesday and the June non-farm payrolls number will be put out on Friday.
The non-farm payrolls, the most-watched indicator, will provide cues on the health of the U.S. labour market.
Remarks from Federal Reserve Chair Jerome Powell are expected on Tuesday, followed by minutes from the Fed's latest policy meeting.
The U.S. data will hold cues on whether the Fed will cut rates later this year. Hopes of a rate cut in September persisted, following a flat reading on the May U.S. personal consumption expenditures (PCE) price index.
"The data support our view that the disinflation process remains in place," ANZ Bank said in a note.
Fed Fund futures are pricing in a 3-in-4 chance of a September rate cut.
KEY INDICATORS:** One-month non-deliverable rupee forward at 83.45; onshore one-month forward premium at 6.75 paise** Dollar index down at 105.62** Brent crude futures up 0.4% at $85.4 per barrel** Ten-year U.S. note yield at 4.39%** As per NSDL data, foreign investors bought a net $929.2mln worth of Indian shares on Jun. 27
** NSDL data shows foreign investors bought a net $113.3mln worth of Indian bonds on Jun. 27
