Rupee to inch up before US inflation print, tracking Asian peers
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The Indian rupee is poised to open marginally higher on Thursday, in the wake of an uptick on Asian peers before data that may be key to the Federal Reserve cutting or holding rates at its September meeting.
Non-deliverable forwards indicate the rupee will open at 83.48-83.50 to the U.S. dollar compared with 83.52 in the previous session.
Asian currencies rose 0.1% to 0.4% and the dollar index held below the 105 handle. The offshore Chinese yuan was quoting at 7.2870 to the dollar, having weakened past 7.31 last week.
The drop in U.S. Treasury yields amid soft U.S. ISM PMI data and moderating payrolls has relieved the pressure on Asian currencies.
"The relief in Asia, particularly the yuan, probably takes out that small possibility of a new high (for dollar/rupee)," a currency trader at a bank said.
"Let's see the U.S inflation data. Won't be surprised if it barely manages to budge (dollar/rupee)."
Data due later in the day is expected to show that core prices rose 0.2% month-on-month in June, matching the pace of the prior month. The headline measure is expected to rise by a muted 0.1% on-month.
"The direction of travel (for inflation) remains unchanged and we continue to expect lower inflation ahead," Julien Lafargue, Chief Market Strategist at Barclays Private Bank, said.
That, along with signs the U.S. economy is cooling, means the Fed could be in a position to lower interest rates in September, he said.
On interest rate cuts, Fed Chair Jerome Powell said on Wednesday the central bank will make the decisions "when and as" they are needed, pushing back on a suggestion that a September rate cut could be seen a political act ahead of the November presidential election.
KEY INDICATORS:** One-month non-deliverable rupee forward at 83.55; onshore one-month forward premium at 7 paise** Dollar index down at 104.90** Brent crude futures up 0.9% at $85.9 per barrel** Ten-year U.S. note yield at 4.29%
** As per NSDL data, foreign investors bought a net $183.1 mln worth of Indian shares on Jul. 9
** NSDL data shows foreign investors bought a net $68.1 mln worth of Indian bonds on Jul. 9
