Rupee back on the ropes after US yields spike post jobs data
MUMBAI, June 9 (Reuters) - The Indian rupee is set to come under renewed stress on Monday after the U.S. economy added slightly more number of jobs than was expected, prompting a rise in U.S. Treasury yields and bringing relief to the dollar.
The 1-month non-deliverable forward indicated a open in the 85.74-85.78 range, versus the close of 85.6250 in the previous session.
The Indian currency had found respite on Friday after the Reserve Bank of India delivered a larger-than-expected rate cut while the signalling limited room for more reductions. The policy surprise lifted domestic equities and lent support to the rupee.
"The opening today is probably just a retracement of Friday's move," a currency trader at a Mumbai-based bank said. "With the U.S. jobs data broadly positive for the dollar, the rupee is simply coming back under pressure."
The trader is betting on a 85.60-86.00 range for the week with bias more-or-less neutral.
Employers added 139,000 jobs last month, above estimates for an increase of 130,000. Average hourly earnings increased 0.4% in May against a rise of 0.3%. The unemployment rate was unchanged at 4.2%.
Federal Reserve rate cut expectations were scaled back post the data, Morgan Stanley said in its daily commentary. The market-implied rate for the December Fed meeting was re-priced 9 basis points higher, implying just 42 bps of rate cuts through 2025, it said, adding that the probability of a rate cut in July fell to 12% from 25%.
The 10-year U.S. Treasury yield climbed nearly twelve bps on Friday and the dollar index rose 0.5%.
The key U.S. jobs report followed a string of mostly weak data points that had raised concerns about the economic outlook.
With that risk now tempered to an extent, attention turns to the pivotal U.S.-China trade talks scheduled to take place in London later in the day.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.84; onshore one-month forward premium at 8.75 paise
** Dollar index at 98.99 ** Brent crude futures down 0.1% at $66.4 per barrel ** Ten-year U.S. note yield at 4.49%
** As per NSDL data, foreign investors bought a net $5.8 million worth of Indian shares on Jun. 5
** NSDL data shows foreign investors sold a net $9.3 million worth of Indian bonds on Jun. 5
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