Rupee seen weaker after US jobs data casts doubts on Fed rate cuts
MUMBAI, June 10 (Reuters) -The Indian rupee is expected to open lower on Monday, after jobs data indicated that the U.S. labour market remained robust, reducing the likelihood of Federal Reserve rate cuts later this year.
Non-deliverable forwards indicate rupee INR=IN will decline to around 83.48-83.50 from 83.3725 in the previous session.
The rupee last week was choppy amid India's election results, which spurred foreigners to sell local equities and likely dollar sales by the Reserve Bank of India.
"I would think this repeated intervention by the RBI near 83.50-83.55and the expectation of that will mean that the higher opening (on dollar/rupee) will not have much carry through. At least initially," a currency trader at a bank said.
The dollar index advanced on Friday, and the 10-year U.S. Treasury yields rose by the most in two months after data showed job growth accelerated more than expected in May. US/
The probability that the Fed will cut rates at the September meeting dropped. Futures are now pricing in just 35 basis points of total rate cuts this year, down from nearly 50 bps before the data.
U.S. wage inflation climbed in May, with average hourly earnings rising 0.4% after a 0.2% increase in April, providing one more reason to pare Fed rate cut bets.
"In terms of what this means for the Fed - well it confirms that the Fed will be pushing back rate cut projections from 3 cuts this year to most probably 2 cuts this year.. we can't rule them out saying just one for this year," ING Bank said in a note.
Asian currencies were down on the day with the Korean won, the Thai baht and the Indonesian rupee slipping between 0.5% to 0.8%. Asian equities dipped alongside U.S. equity futures.
KEY INDICATORS: ** One-month non-deliverable rupee INRNDFOR= forward at 83.55; onshore one-month forward premium at 6 paise ** Dollar index =USD up at 105.12 ** Brent crude futures LCOc1 up 0.2% at $79.8 per barrel ** Ten-year U.S. note yield at 4.45% ** As per NSDL data, foreign investors sold a net $811.2mln worth of Indian shares on June 6
** NSDL data shows foreign investors bought a net $112.8mln worth of Indian bonds on June 6
Reporting by Nimesh Vora; Editing by Eileen Soreng
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
