MUMBAI: The Indian rupee is expected to open lower against the US currency on Friday, after the dollar index climbed to its highest level in 20 years, ahead of the critical US jobs report.
The rupee is tipped at around 79.68-79.70 per US dollar in initial trades, down from 79.5550 in the previous session. The rupee on Thursday witnessed a choppy session, trading in a 79.30 to 79.66 range.
The market is “a bit indecisive” on what to do after rupee managed a “decent enough recovery” from record lows, a trader at a Mumbai-based bank said. The bias on the USD/INR pair is now “more neutral” rather than “a buy-on-dips,” the trader said.
“With the bias neutral, today’s US jobs data and India’s trade deficit numbers will be key.”
The dollar index on Thursday climbed to just shy of the psychologically important 110 level.
An unexpected decline in US jobless claims alongside slightly better-than-expected US ISM manufacturing supported demand for the dollar.
The data is expected to further reaffirm room for the Federal Reserve to opt for larger rate increases.
Indian rupee seen lower, Fed rate outlook weighs on Asian peers
Treasury yields rose Thursday, with the 2-year reaching a new 15-year high.
Non-farm payrolls data is due at 1230 GMT and economists expect 300,000 jobs were added in August, which would extend a strong run of data.
The report assumes significance in light of Fed’s remarks that the pace of rate hikes is data dependant.
Higher-than-expected job additions will further increase odds of the Fed hiking rates by 75 basis points at this month’s meeting.
Asian shares and currencies were moderately lower on Friday.
Meanwhile, India’s trade deficit numbers will likely be released later in the day.
According to calculations by Reuters, based on information from a government source, India’s trade deficit in August moderated to $28.68 billion from $30 billion in the previous month.
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