Rupee ended lower, Dollar higher vs. major currencies

Tuesday,   03-Sep-2024   04:01 PM (IST)

The Indian rupee ended the session lower at 83.9675/9775 levels compared to its opening at 83.93/94 levels after touching the low of 83.97/98 as Asian currencies broadly struggled before a cluster of U.S. data that will provide cues on the pace of the Federal Reserve rate cuts. Rupee traded in the range of 83.93-83.97 levels today. Banks persistently purchased dollar on behalf of oil marketing companies. However, likely dollar sales by RBI prevented the rupee from falling further. Indian government bond yields were little changed amid a lack of fresh cues. Indian shares ended little changed near record highs as investors awaited crucial data from the United States that is expected to decide the extent of a rate cut this month. The BSE Sensex shed 4.40 points or 0.01% to settle at 82,555.44 at close. The Nifty 50 gained 1.15 points and closed nearly flat at 25,279.85.  In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 1.19%, 1.29% and 1.61% respectively.

The dollar hovered close to a two-week high on Tuesday as investors geared up for a slew of economic data, including Friday's U.S. payrolls, that could influence the size of an expected interest rate cut from the Federal Reserve. The yen, meanwhile, broke a four-day losing streak against the dollar after media reports cited the Bank of Japan governor reiterating in a document submitted to a government panel on Tuesday that the central bank would keep raising interest rates if the economy and inflation performed as policymakers currently expect. Japan's yen, which has staged a 10% rally in the last two months - aided in part by official intervention - gained, leaving the dollar down 0.7% at 145.815. That left the dollar index, which measures the U.S. currency against six rivals, modestly in positive territory at 101.68, just shy of the two-week high of 101.79 it touched on Monday. The index fell 2.2% in August on expectations of U.S. rate cuts. Investor focus this week will squarely be on the U.S. payrolls data due on Friday after Fed Chair Jerome Powell last month endorsed an imminent start to interest rate cuts in a nod to concern over a softening in the labour market. Ahead of that, job openings data on Wednesday and the jobless claims report on Thursday will be in the spotlight. Markets are pricing in a 69% chance of a 25 basis points (bps) cut when the Fed meets on Sept. 17 and 18, with a 31% probability of a 50-bps cut, CME FedWatch tool showed. Economists surveyed by Reuters expect an increase of 165,000 U.S. jobs in August, up from a rise of 114,000 in July. Data on Friday showed personal consumption expenditures (PCE) price index - Fed's preferred measure of inflation - rose 0.2% in July, matching economists' forecasts, keeping the U.S. central bank on the path to cut rates. Markets, though, anticipate 100 bps of cuts from the remaining three meetings this year.