September 3, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) traded lower in early European trading on Tuesday, pressured by a recovering US Dollar (USD). Despite this, foreign fund inflows, a positive Indian equity market, and declining crude oil prices may help limit INR’s losses. However, increased USD demand from importers and safe-haven flows ahead of key US labor market data are likely to weigh on the local currency.
Key Economic Indicators to Watch:
- US ISM Manufacturing PMI: Due later today, this indicator will set the tone for market sentiment ahead of the Indian August HSBC Services PMI.
- US Labor Market Data: Friday’s reports, including Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for August, will be critical. Fed Chair Jerome Powell’s recent comments have made this Friday’s NFP data particularly significant. A weaker-than-expected outcome may increase the likelihood of a larger rate cut, pressuring the USD.
Market Movers and Expectations:
- HSBC India PMI: The Manufacturing PMI for August eased to a three-month low of 57.5, down from 57.9 in July, reflecting slower new orders and output due to intense competition. However, the Services PMI is expected to improve slightly to 60.4 from 60.3.
- US ISM PMI Forecasts: The Manufacturing PMI is projected to rise to 47.5 in August from 46.8, while the Services PMI is forecasted to ease to 51.1 from 51.4.
Fed Rate Cut Outlook:
According to the CME FedWatch Tool, the market is currently pricing in a nearly 69% chance of a 25 basis point rate cut by the Federal Reserve in September. The outcome of the US economic data releases this week could further shape these expectations.
The Indian Rupee remains on the defensive, influenced by global economic factors and investor sentiment. The upcoming US economic data, particularly Friday’s NFP report, will play a crucial role in determining the direction of the INR and broader financial markets.
Disclaimer:
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