Fed Taper uncertainty continues
USD exhibited broad weakness last week after a much weaker than expected U.S. payrolls report that is likely to keep the Federal Reserve at bay in scaling back its massive stimulus measures. Federal Reserve Chair Jerome Powell last week at the Jackson hole summit said that the recovery of the labor market is a key condition for starting to withdraw monetary policy. The yield on the benchmark 10-year Treasury note gained about 2 basis points, trading near 1.33%.
Nonfarm payrolls increased by 235,000 in August, well short of the expectation of 728,000, while the unemployment rate dipped to 5.2% from 5.4% in the prior month. The growth in average hourly earnings continues to come in strong with a 0.6% rise month over month, the big jump in wages has inflationary implications, which has also pushed yields higher.
US consumer confidence slumped to a six-month low as rising covid cases dampened the economic outlook. The Conference Board revealed that consumers were less likely to buy big-ticket items over the coming six months supporting the view that consumer spending is likely to cool in the third quarter after two strong quarters of spending.
Indian service sector activity surged in August
INR traded higher last week amid broad USD weakness and as data reveals that the service sector in the Indian economy grew at the fastest pace since the pandemic began.
The IHS services PMI rose to 56.7 in August it's the strongest pace since the pandemic started in March 2020. The PMI was at 45.4 in July having been below 50 for 3 months.
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