The Indian rupee is expected to advance on Wednesday after weaker-than-expected U.S. job openings prompted a decline in the U.S. dollar index and Treasury yields. Non-deliverable forwards indicate rupee will open at around 82.60 to the dollar compared with its previous close of 82.7050 .
In wake of the decent sized down move on (U.S.) yields and dollar, rupee will “have a good opening”, a forex trader at a Mumbai-based bank said. “But after that, I think it is more than likely that there will be no further dip (on USD/INR) and we move up.”
The data indicated that the labour market was cooling off, and for investors that meant that the U.S. Federal Reserve will not be required to hike interest rates more. The odds of a Fed rate hike at the November meeting dropped to less than 50%.
“At the highest point earlier this week, the odds were near to 70% but bets got pared when job openings fell much more than consensus expectations,” DBS Research said in a note.
“The crux (on whether there will a hike in November) lies with whether (Fed Chair) Jerome Powell needs to see the labour market weaken materially to pause.” Disappointing U.S. consumer confidence data provided another reason to investors to reduce the probability of a rate hike in November, pushing the dollar lower.