MUMBAI: The Indian rupee is expected to struggle on Friday following a jump in US yields and the dollar index on expectations that more Federal Reserve rate hikes were on the way.
Non-deliverable forwards indicate rupee will open at around 82.08 to the US dollar compared with 82.0550 in the previous session.
The USD/INR pair has, over the last few sessions, repeatedly run into support below the 82 handle.
“Having built a decent bottom near the 82-level and in the wake of the dollar’s up move, let’s see if we can challenge the 82.20 resistance,” a forex trader said.
US yields and the dollar index rose overnight on the back of the better-than-expected US gross domestic product (GDP)data and the drop in jobless claims.
The final print for first-quarter GDP growth came in at 2.0%, higher than last month’s 1.3% reading and the 1.4% forecast by economists polled by Reuters.
US weekly claims for unemployment insurance dropped to 239,000 from last week’s revised 265,000 number.
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“The scale of the revision higher (on US GDP) will be taken by some to mean that the Fed still has a lot of work to do,” ING Bank said in a note.
Odds of a 25-basis point hike by the Fed next month reached nearly 85% and that for another in September or November rose.
The 2-year US yield climbed to nearly 4.90% overnight, the highest since March.
The dollar index reached a two-week high.
The jump in yields did not impact risk appetite.
The S&P 500 Index rose and most Asian shares were higher.
The US May core personal consumption expenditures (PCE) data is due on Friday, a data point that could potentially impact Fed rate expectations.
Economists polled by Reuters expect the core PCE Index to rise 0.3% month-on-month.
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