- The Indian Rupee edges higher on the modest decline of US Dollar on Friday.
- Indian HSBC Services PMI climbed to 60.4 in June from 60.2 in May; Manufacturing PMI rose to 58.5 in June.
- Foreign inflows into Indian bonds could lift the INR, while higher crude oil prices might weigh on the INR.
- The Reserve Bank of India MPC meeting minutes and first reading of June’s US PMI data are due on Friday.
The Indian Rupee (INR) gains ground on Friday due to the modest decline of the US Dollar (USD). The business activity in India continues to improve in June, driven by robust demand in both manufacturing and service sectors. The advanced reading of the country’s HSBC Manufacturing PMI data rose to 58.5 in June from 57.5 in May. Meanwhile, the Services PMI climbed to 60.4 in the same reported period from 60.2 in May. This figure came in better than the market expectation of 60.0. The INR edges modestly higher after the stronger Indian PMI report.
Furthermore, the significant inflows into the Indian bond market ahead of India’s inclusion in the JPMorgan Emerging Market bond index at the end of this month are likely to boost the local currency in the near term.
On the other hand, the renewed Greenback demand from local importers, likely capital outflows, and the weakening in the Chinese Yuan might exert some selling pressure on the INR. Additionally, the rally in crude oil prices might drag the INR lower as India is the third-largest consumer of crude oil in the world. Investors will keep an on the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) meeting minutes on Friday. On the US docket, the first reading of S&P Global Purchasing Managers Index (PMI) reports for June will be published.
Daily Digest Market Movers: Indian Rupee edges higher amid foreign inflows into Indian markets
- Foreign investors have sold a net of US$2.6 billion of local equities so far this calendar year, while US Dollar inflows into the debt markets have been strong at US$7.5 billion ahead of India’s inclusion in the JPMorgan Emerging Market bond index.
- Foreign inflows into Indian bonds could reach a decade-high of $2 billion around June 28, when they will be included in a widely-tracked JPMorgan index, although the RBI will lap up most of the USD to avoid the volatility in the INR, bankers said.
- The preliminary India’s HSBC Services PMI is expected to drop to 60.0 in June from 60.2 in May.
- US citizens who applied for unemployment insurance benefits increased by 238K in the week ending June 15. This figure was lower than the previous weekly gain of 243K and below the market consensus of 235K.
- US Building Permits declined by 3.6% MoM in May from 1.44 million to 1.386 million, while Housing Starts for the same period dropped by 5.5% from 1.352 million to 1.277 million.
- Fed Bank of Richmond President Tom Barkin said on Thursday that the central bank is well-positioned with the necessary firepower for the job, but will learn a lot more over the next several months.
Technical analysis: USD/INR holds bullish bias in the longer term
The Indian Rupee trades stronger on the day. The USD/INR pair keeps the constructive vibe unchanged as it holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The bullish momentum is also supported by the 14-day Relative Strength Index (RSI), which remains above the 50-midline, supporting the buyers for the time being.
Any follow-through buying will attract some buyers to the all-time high of 83.75. The next barrier will emerge at the 84.00 psychological level.
On the downside, the initial support level for the pair is seen near 83.60, a low of June 20. The potential contention level to watch is the 83.30-83.35 region, the resistance-turned-support level, and the 100-day EMA. Extended losses will expose the 83.00 round figure.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.19% | 0.73% | -0.48% | -0.52% | 1.11% | 0.56% | -0.31% | |
| EUR | -0.19% | 0.54% | -0.68% | -0.71% | 0.91% | 0.38% | -0.51% | |
| GBP | -0.73% | -0.53% | -1.21% | -1.25% | 0.39% | -0.15% | -1.05% | |
| CAD | 0.47% | 0.67% | 1.20% | -0.04% | 1.57% | 1.04% | 0.15% | |
| AUD | 0.52% | 0.72% | 1.25% | 0.04% | 1.62% | 1.09% | 0.20% | |
| JPY | -1.12% | -0.92% | -0.36% | -1.61% | -1.65% | -0.55% | -1.44% | |
| NZD | -0.55% | -0.38% | 0.16% | -1.06% | -1.10% | 0.54% | -0.90% | |
| CHF | 0.31% | 0.51% | 1.05% | -0.15% | -0.19% | 1.42% | 0.90% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
