Rupee seen higher on dollar slump as data backs Fed rate pause

By Nimesh Vora

MUMBAI (Reuters) – The Indian rupee is poised to open higher on Friday, tracking losses on the dollar after a jump in U.S. jobless claims made it more likely that the Federal Reserve will refrain from raising rates next week.

Non-deliverable forwards indicate the rupee will open at around 82.44-82.46 to the U.S. dollar compared with 82.5625 in the previous session.

The rupee on Thursday barely responded to the Reserve Bank of India’s policy decision.

The currency’s lack of response was “exactly what you would expect”, and it looks like the that USD/INR has “resolved into” a 20-paisa range on either side of the 82.50 level, a foreign exchange spot trader said.

“Speculative interest is low currently, which is to be expected (in a currency pair) that has low volatility and lacks direction,” he said.

The dollar index on Thursday suffered its worst session in just under two months after data revealed that the number of Americans filing new claims for unemployment benefits jumped to the highest in more than 1-1/2 years.

“The data further support market expectation for a pause by the U.S. Fed at its next meeting,” OCBC Treasury Research said in a note.

The odds of a Fed rate hike at the June 13-14 meeting is now at 1-in-4. U.S. yields dropped overnight while equities rose. The S&P 500 Index at one point crossed into bull market territory – a 20% up move from its October low.

Asian shares followed their U.S. peers higher, while currencies were up between 0.2% to 0.6%.

The U.S. inflation data due next Tue is the next key event for Asia. An upward surprise could put a Fed rate hike back into consideration.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.54; onshore one-month forward premium at 8 paise ** USD/INR NSE June futures settled on Thursday at 82.6075 ** USD/INR June forward premium at 4.5 paise ** Dollar index at 103.38 ** Brent crude futures down 0.5% at $75.6 per barrel ** Ten-year U.S. note yield at 3.73% ** SGX Nifty nearest-month futures up 0.2% at 18,754 ** As per NSDL data, foreign investors bought a net $175mln worth of Indian shares on Jun. 7

** NSDL data shows foreign investors bought a net $18.1mln worth of Indian bonds on Jun. 7

(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)