US jobs jolt fans Fed rate cut buzz; Indian rupee to ride dollar slump
The 1-month non-deliverable forward indicated the rupee will open in the 87.18-87.22 range versus the U.S. dollar, up from 87.54 on Friday.
The rupee fell over 1% last week to its lowest level since February, pressured by equity outflows and concerns over a 25% U.S. tariff on imports from India.
'The broader trend (on USD/INR) remains bid. While Friday's dollar move is an unexpected turn for dollar longs, dip-buying interest will persist,' a forex spot trader at a private bank said.
'At worst, dollar longs will have to endure a drop to 87.'
The dollar index slumped 1.35% on Friday, its worst day since mid-April, after July employment data revealed a notable slowdown in U.S. job additions.
Not only did the latest job additions miss expectations, data for the previous two months was revised down significantly.
U.S. equities slid, Treasury yields fell and the odds of a Fed rate cut at the September meeting climbed to 80%.
The disappointing data comes on the back of a slightly hawkish tone adopted by Fed Chair Jerome Powell at the July 29-30 meeting presser, which had provided a boost to the dollar.
'A wholly weak U.S. jobs report has pulled the rug from under Jerome Powell's hawkish stoicism and stopped the dollar's rally in its tracks,' ING Bank said in a note. The bank added that the dollar has likely marked out a near-term peak.
Asian currencies climbed on Monday with the Malaysian ringgit and Indonesian rupiah leading the way.
The dollar index was up slightly following Friday's dive.
Meanwhile, the maturity of a $5 billion dollar-rupee buy/sell swap conducted by the India's central bank six months back will be in focus on Monday.
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