September 4, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) traded on a softer note during Wednesday’s early European session, even as the HSBC India Services Purchasing Managers Index (PMI) showed stronger-than-expected growth in August. The INR faced pressure from a firmer US Dollar (USD) and cautious market sentiment.
Key Highlights:
- HSBC India Services PMI:
- The HSBC India Services PMI rose to 60.9 in August from 60.3 in July, surpassing the market consensus of 60.4 and reaching the highest level since March.
- Despite the upbeat PMI data, the INR struggled to gain traction against the USD.
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- Potential RBI Interventions:
- Traders remain cautious about possible interventions by the Reserve Bank of India (RBI) to prevent the INR from breaching the 84 mark, although there has been no official confirmation.
- Impact of Crude Oil Prices:
- A decline in crude oil prices to their lowest levels since January might support the INR, given India’s position as the world’s third-largest oil consumer and importer.
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Market Sentiment and Upcoming US Data Releases:
- Stronger USD and Risk Aversion:
- Renewed demand for the USD from importers and a risk-averse market environment continue to weigh on the INR.
- Investors are awaiting the release of the US JOLTS Job Openings and Fed Beige Book later on Wednesday for fresh market impetus.
- Focus on US Nonfarm Payrolls (NFP):
- Market participants are also looking ahead to the US Nonfarm Payrolls (NFP) data for August, which will be released on Friday. This data could provide clues about the Federal Reserve’s rate cut trajectory.
Economic Insights:
- Indian Economic Growth Outlook:
- The World Bank recently raised India’s growth forecast to 7% for the current financial year (FY25), up from its earlier projection of 6.6%.
- RBI Deputy Governor Michael Patra emphasized the need for rapid economic growth over the next decade to achieve India’s goal of becoming a developed nation by 2047.
- US Economic Data:
- The US ISM Manufacturing PMI rose slightly to 47.2 in August from 46.8 in July, signaling a continued contraction in manufacturing activity, albeit at a slower pace than expected.
Interest Rate Expectations:
- Fed Rate Cut Odds:
- Financial markets have priced in a 61% probability of a 25 basis points (bps) rate cut by the Fed in September, while the chance of a larger 50 bps cut stands at 39%, according to the CME FedWatch Tool.
The Indian Rupee’s trajectory will depend on several factors, including potential RBI interventions, crude oil price movements, and upcoming US economic data. With key data releases and Fed signals on the horizon, traders will closely monitor these developments to gauge the future direction of the INR.
Disclaimer:
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