- The Indian Rupee gains sharply against the US Dollar ahead of the US NFP data for June.
- The US NFP data will significantly influence market expectations for the Fed’s monetary policy outlook.
- FIIs have sold Indian equities worth Rs. 3,531.76 crores in the first two trading days of July.
The Indian Rupee (INR) surges against the US Dollar (USD) during the European trading session on Thursday. The USD/INR pair posts a fresh monthly low near 85.45 as the US Dollar drops ahead of the United States (US) Nonfarm Payrolls (NFP) data for June, which will be published at 12:30 GMT.
The US NFP report is expected to show that the economy added 110K fresh workers, fewer than 139K in May. The Unemployment Rate is estimated to have accelerated to 4.3% from the prior reading of 4.2%.
Financial market participants will also pay close attention to the Average Hourly Earnings data, a key indicator of wage growth, which is expected to have grown steadily by 3.9% on year. Month-on-month wage growth measure is estimated to have risen at a slower pace of 0.3%, compared to a 0.4% growth seen in May.
Investors will closely monitor the US NFP data as a few Federal Reserve (Fed) officials have argued in favor of interest rate cuts as early as the July policy meeting, citing concerns over labor market strength.
“The Fed should not wait for the job market to crash in order to cut rates,” Fed Governor Christopher Waller said in an interview in the last week of June.
Meanwhile, the ADP Employment Change data on Wednesday has shown cracks emerging in the labor market. The agency reported a decline in the labor force in the private sector for the first time since the pandemic era. Businesses laid off 33K employees in June, while they were expected to hire 95K fresh workers. Additionally, the May reading was also revised lower to 29K from 37K.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” Nela Richardson, chief economist at ADP, said.
Daily digest market movers: Indian Rupee gains sharply against US Dollar
- The Indian Rupee gains against its major peers even as Foreign Institutional Investors (FIIs) have turned cautious ahead of the deadline of the tariff policy imposed by the US on July 9. Foreign investors have sold Indian equities worth Rs. 3,531.76 crores in the first two trading days of July.
- The uncertainty surrounding the reciprocal tariff policy, as the approaching deadline has forced investors to stay on the sidelines. While market experts struggle to gauge its likely impact on the global economy, Washington is still negotiating trade agreements with its major trading partners. Meanwhile, the US has stated that it has struck a deal with Vietnam.
- US President Donald Trump has also signaled that Washington will secure a deal with New Delhi before the tariff deadline. “I think we are going to have a deal with India. And that is going to be a different kind of a deal. It is going to be a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to do that, and if they do that, we are going to have a deal for much lower tariffs,” Trump said on Wednesday, ANI News reported.
- The comments from US President Trump indicate that the trade deal is not a complete win for India as it will expose Indian manufacturers to competition from US companies, which are highly capital-intensive.
- Meanwhile, the clearance of Trump’s so-called “Big Beautiful Bill” in the Senate with a narrow majority has increased fears of ballooning already fat US debt. Market experts believe that Trump’s tax and spending cut bill will increase the debt burden to $40 trillion over a decade, a move that could bring further downgrades to US Sovereign Credit.
- Trump’s bill has been passed to the House of Representatives for further approval. If approved, it will march to the president’s desk.
Indian Rupee PRICE Today
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | INR | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.02% | 0.14% | 0.05% | 0.17% | 0.34% | 0.00% | |
| EUR | -0.02% | -0.05% | 0.15% | 0.03% | 0.15% | 0.27% | -0.09% | |
| GBP | 0.02% | 0.05% | 0.18% | 0.08% | 0.19% | 0.30% | 0.05% | |
| JPY | -0.14% | -0.15% | -0.18% | -0.08% | 0.04% | 0.11% | -0.29% | |
| CAD | -0.05% | -0.03% | -0.08% | 0.08% | 0.11% | 0.22% | -0.11% | |
| AUD | -0.17% | -0.15% | -0.19% | -0.04% | -0.11% | -0.06% | -0.25% | |
| NZD | -0.34% | -0.27% | -0.30% | -0.11% | -0.22% | 0.06% | -0.36% | |
| INR | -0.01% | 0.09% | -0.05% | 0.29% | 0.11% | 0.25% | 0.36% |
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 Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Technical Analysis: USD/INR slides below 85.50
The USD/INR pair declines to near 85.45 on Thursday after breaking the three-day trading range between 85.56 and 86.00 on the downside. The near-term trend of the pair was already bearish as it stays below the 20-day Exponential Moving Average (EMA), which trades around 85.90.
The 14-day Relative Strength Index (RSI) stays below 50.00, indicating that the trend is on the downside.
Looking down, the 200-day EMA around 85.35 will act as key support for the major. On the upside, Wednesday’s high of 86.13 will be a critical hurdle for the pair.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation.
A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work.
The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower.
NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa.
Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold.
Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components.
At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary.
The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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