INR is trading weaker today, while other Asian currencies are trading mixed

The JOLTS survey shows that job opening in Nov'23 fell by 62k to 8.79mn from 8.8mn, dropping to lowest levels since Mar'21

Sonal Badhan,

Economist,

Bank of Baroda

Mumbai, January 4, 2024: FOMC minutes of the Dec’23 meeting revealed, that while the members have acknowledged fading inflationary risks, they are now also concerned about of the impact of restrictive monetary policy on growth and employment. Fed Chair is of the view that US economy might skirt off recession, while some other members pointed out that recession is impending. Concerns were also raised that gradual cooling off in the labour market may turn into a “more abrupt downward shift conditions”. The JOLTS survey shows that job opening in Nov’23 fell by 62k to 8.79mn from 8.8mn, dropping to lowest levels since Mar’21. US ISM manufacturing PMI also signals deteriorating conditions in Dec’23 (46.7, unchanged from last month). In Japan as well, manufacturing PMI indicates deepening contraction (47.9 versus 48.3).

• Barring Shanghai comp, other global indices ended lower. Investors closely monitored Fed minutes which reflected some uncertainty over the pace of rate cuts, than was initially anticipated. European indices also ended lower awaiting more cues. Sensex ended in red and was dragged down by losses in metal stocks. However, it is trading higher today while Asian indices are trading mixed.
• Except INR (flat) and GBP (higher), other global currencies closed lower. DXY continue to strengthen (0.3%) with investors assessing the scale of rate cuts. Yen declined led by poor data print (factory activity contracted at steepest pace in 10-months). INR ended flat. However, it is trading weaker today, while other Asian currencies are trading mixed.
• Global yields ended mixed. US 10Y yield was down by 1bps, as investors digested FOMC minutes, which hinted at ebbing inflation risks and a debate on possibility of US entering a recession due to overtightening. India’s 10Y yield also rose a tad (1bps), as oil prices remain on upward trajectory. It is trading slightly lower today at 7.21%.

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