INR Is Trading Stronger Today

Sensex is trading lower today

Aditi Gupta,

Economist,

Bank of Baroda

Mumbai, March 11, 2024: US non-farm payroll rose more than expected by 275,000 in Feb’24 (est. 200,000) from 167,000 in Jan’24. Even so, unemployment rate rose to a 2-year high of 3.9% from 3.7% in Jan’24. Average hourly earnings moderated to 0.1% (MoM) from 0.5% in Jan’24, suggesting some softness in the labour market. This has pushed forward the possibility of the first rate cut in Jun’24. Separately, Japan revised its Q4CY23 GDP upwards to 0.4% (YoY) versus a contraction of 0.4% estimated earlier. CPI inflation in China inched up for the first time since Aug’23 and rose by 0.7% in Feb’24 (est. 0.3%). However, PPI continued to fall and contracted by 2.7% versus a decline of 2.5% in Jan’24. In India, government announced a cut in cooking gas prices and also extended the subsidy under Ujjwala scheme till FY25. This should help in further easing domestic inflation. Fiscal impact is likely to be limited.   

• Except Global stocks closed mixed. US stocks moderated as jobs data gave mixed signals about trajectory of Fed fund rate. Hang Seng and Shanghai Comp inched up. The rise in Nikkei was pared to some extent following anticipation about a likely pivot by BoJ. Sensex was marginally higher, led by metal and capital goods stocks. It is trading lower today, in line with other Asian stocks.
• Except EUR (lower), other global currencies ended stronger against the dollar. DXY was 0.1% lower after a mixed jobs report. JPY gained the most by 0.7% amidst increased expectations of a hawkish pivot by BoJ. GBP too gained 0.4%, amidst expectations of a delayed start to BoE’s rate cut cycle. INR is trading stronger today in line with other Asian currencies.

Except Japan and China (stable), global yields closed lower. Germany’s 10Y yield fell the most as ECB hinted at cautiously prepping up for an easing cycle.

The fall in UK’s 10Y yield was clipped to certain extent as investors are pricing in a slower start to the rate cut cycle by BoE. India’s 10Y yield fell by 2bps tracking improvement in liquidity situation. It is trading at 7.01% today.

(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)