The Indian rupee ended at 70.81to the dollar, against 70.92 at previous close

The Indian rupee ended at 70.81to the dollar, against 70.92 at previous close

02 Nov 2019 05:45 PM

Indian Rupee

The Indian rupee ended at 70.81to the dollar, against 70.92at previous close, in line with Asian peers and tracking gains in shares. The currency ended 0.1% higher against the dollar this week, as mixed remarks by the U.S. and China cast doubts about the prospects of a trade truce and offset gains from equity-related dollar inflows. It trades in a weekly range between 68.68 to 71.0450 against the greenback.

India's unemployment rate in October rose to 8.5%, the highest since August 2016, and up from 7.2% in September, according to data released by the Centre for Monitoring Indian Economy on Friday. India's infrastructure output fell 5.2% in September from a year earlier, the worst performance in years, government data showed on Thursday.

India's factory activity growth hit a two-year low in October as new orders and output rose at a slower pace, dragging business confidence to its weakest since early 2017. he Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, dropped to 50.6 last month from September's 51.4.

India's foreign exchange reserves rose for a fifth straight week to hit a record high of $442.58 billion as of the week ended Oct. 25, from $440.75 billion at the end of the prior week, according to central bank data released today. The gain was mainly due to increase in foreign currency assets that climbed to $410.45 billion from $408.81 billion in the previous week, the data showed.

Global Market

The dollar fell to its lowest in some 10 days in early trading in Europe amid hopes that the world economy may be bottoming out. Those hopes rested largely on a Chinese business. The dollar index, which tracks the dollar against a basket of developed market currencies, was down 0.1% at 97.037, on course for a 0.6% drop on the week. Sterling was up 0.2% at $1.2966 while the euro was up 0.1% at $1.1157.

U.S. job growth slowed less than expected in October as the drag from a strike at General Motors was offset by gains elsewhere and hiring in the prior two months was stronger than previously estimated, offering some assurance that consumers would continue to support the slowing economy. The unemployment rate picking up from near a 50-year low of 3.5% last month.

U.S. construction spending increased more than expected in September as investment in homebuilding rose its highest level in nine months. The Commerce Department said on Friday construction spending rebounded 0.5%. Data for August was revised down to show construction outlays falling 0.3% instead of ticking up 0.1% as previously reported.

The latest jobs report gave the stock market everything it wanted, with strong payroll growth and tamer inflation. Stocks rose at the open of trading, with the S&P 500 rising 0.6%. Nonfarm payrolls rose by 128,000, compared with expectations for a rise of 89,000 September's hiring was revised up to 180,000 from an initially-reported 136,000. The unemployment rate ticked up to 3.6%, in line with frecasts.

U.S. consumer spending increased marginally in September while wages were unchanged, which could cast doubts on consumers' ability to continue driving the economy amid a deepening slump in business investment. The data came a day after the Federal Reserve cut interest rates for the third time this year. Signs of a slowdown in consumer spending and persistently low inflation could force the U.S. central bank to consider a rate cut early next year.

U.S. labor costs increased in the third quarter as a tightening labor market lifted wages across the board. The Employment Cost Index, the broadest measure of labor costs, increased 0.7% after rising 0.6% in the second quarter. That raised the year-on-year rate of gain in the ECI to 2.8%. Labor costs advanced 2.7% on a year-on-year basis in the second quarter.

The number of Americans filing applications for unemployment benefits rose slightly more than expected last week. Initial claims for state unemployment benefits increased 5,000 to a seasonally adjusted 218,000 for the week ended Oct. 26, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

U.S. consumer spending rose marginally in September while wages were unchanged, which could cast doubts on consumers' ability to continue driving the economy amid a deepening slump in business investment. The  consumer spending, which accounts for more than two-thirds of U.S. economic activity, gained 0.2% last month as households stepped up purchases of motor vehicles and spent more on healthcare.

The Federal Reserve on Wednesday cut interest rates for the third time this year to help sustain U.S. growth despite a slowdown in other parts of the world. We believe that monetary policy is in a good place Fed Chair Jerome Powell said in a news conference after the U.S. central bank announced its decision to cut its key overnight lending rate by a quarter of a percentage point to a target range of between 1.50% and 1.75%.

U.S. economic growth slowed less than expected in the third quarter as a further contraction in business investment was offset by resilient consumer spending, further allaying financial market fears of a recession. The Trump administration's trade war with China has eroded business confidence, contributing to the second straight quarterly contraction in business investment. The fading stimulus from last year's $1.5 trillion tax cut package is also sapping momentum from the expansion.

A resilient American consumer helped the U.S. economy expand more than forecast in the third quarter, assuaging concerns for now of a more pervasive slowdown tied to weakening business investment and faltering export markets. Gross domestic product expanded at a 1.9% annualized rate. The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise.

U.S. private employers added 125,000 jobs in October, slightly above economists' expectations, a report by a payrolls processor showed on Wednesday. National Employment Report would show a gain of 120,000 jobs, with estimates ranging from 40,000 to 190,000. Private payroll gains in the month earlier were revised down to 93,000 from an originally reported 135,000 increase.

U.S. consumer confidence fell for a third straight month in October amid concerns about the short-term outlook for business conditions and job prospects, but remained at levels consistent with continued growth in consumer spending. Contracts to purchase previously owned homes jumped in September to their highest level in nearly two years and house prices increased solidly in August.

Contracts to buy previously owned homes increased more than expected in September. The National Association of Realtors said on Tuesday its Pending Home Sales Index, based on contracts signed last month, advanced 1.5% to a reading of 108.7. Pending home contracts become sales after a month or two, and last month's increase suggested a rebound in existing home sales, which declined 2.2% in September. Pending home sales surged 3.9% in September from a year ago.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) rose to 49.6 from 48.3 in September, its highest level since April and topping all forecasts in a Reuters poll of economists that had pointed to a reading of 48.1. However, the index still remained below the 50 dividing line between growth and contraction. October's PMI was flattered by manufacturers building stocks ahead of the Oct. 31 date for Brexit that was superseded this week by a Jan.

Japan's September jobless rate climbed from near 30-year lows and job availability slipped, government data showed on Friday. he seasonally adjusted unemployment rate rose to 2.4%, compared with economists' median forecast of 2.3%, figures from the Ministry of Internal Affairs and Communications showed. The unemployment rate stood at 2.2% in July and August, the lowest since 1992.

Euro zone economic sentiment deteriorated in October for a second straight month, data showed on Wednesday. The European Commission said its main indicator for economic sentiment in the 19-country currency bloc fell to 100.8 points in October from 101.7 a month earlier and 103.1 in August. The fall was bigger than market consensus of 101.1 points in October, and brought the indicator to its lowest point since January 2015.

Local Market

Indian shares closed slightly higher on Friday, helped by growing expectation of better December-quarter corporate earnings on the back of solid results for the July-September period. The NSE Nifty 50 index ended 0.11% higher at 11,890.6, while the S&P BSE Sensex gained 0.09% to 40,165.03. The Nifty and the Sensex ended the week up 2.65% and 2.83%.

India's fiscal deficit in the six months through September stood at 6.52 trillion rupees or 92.6% of the budgeted target for the current fiscal year, government data showed on Thursday. Net tax receipts in the first half of the current fiscal year ending in March 2020 were 6.07 trillion rupees, while total expenditure was 14.89 trillion rupees.

India's infrastructure output fell 5.2% in September from a year earlier, government data showed on Thursday. During April-September, output grew 1.3% from the year-ago period, according to the data. Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40% of India's industrial output.

Oil prices surged almost 3% on Friday on stellar U.S. jobs growth for October and a report that China has reached a consensus with the White House on core concerns in their trade war. Increases in production from the U.S. and OPEC may have offset the upside potential for oil prices. West Texas Intermediate, the benchmark for New York-traded crude, settled up $2.02, or 3.7%, at $56.20 per barrel. Brent, the London-traded global gauge for oil, closed the regular U.S. trading session up $2.07, or 3.5%, at $61.69.