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The Indian Rupee remains steady against the US Dollar as markets await the announcement of the India-US trade deal.
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Investor sentiment turns cautious ahead of the looming US tariff deadline on July 9.
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The latest US NFP report reveals a sharp slowdown in private sector hiring for June.
The Indian Rupee (INR) remains steady against the US Dollar (USD) on Friday, as investors await confirmation of a potential trade agreement between India and the United States (US).
At the time of writing, the USD/INR pair trades sideways near 85.55. The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, has edged slightly below 97.00. Meanwhile, US markets are closed for the Independence Day holiday.
The outlook for the Indian currency stays firm, supported by optimism that a trade agreement could be reached before the July 9 tariff deadline. According to NDTV, the deal could be announced within “48 hours,” with both countries aiming to reduce overall duty barriers and foster a more competitive trade environment. However, India is expected to maintain protective measures for its agriculture sector and labor-intensive industries such as leather, footwear, and textiles.
US President Donald Trump signaled progress on Wednesday, expressing confidence in a forthcoming deal. “I think we are going to have a deal with India. And that is going to be a different kind of a deal... a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to do that,” Trump said, as reported by ANI News.
Despite this optimism, Indian equity markets continue to see outflows from Foreign Institutional Investors (FIIs), who have likely been reducing their exposure ahead of the July 9 deadline. FIIs have sold equities worth ₹5,012.95 crore in the first few trading days of July.
During the last trading session, both the Nifty and Sensex edged slightly lower as traders remained cautious amid ongoing trade negotiations. President Trump has warned that letters will be sent to countries without finalized deals, outlining new import tariff rates, further raising the stakes as the deadline approaches.
Daily Digest Market Movers: US Dollar Retreats as NFP Report Reveals Private Sector Weakness
- The Indian Rupee (INR) held broadly steady against the US Dollar (USD) on Friday, while the Greenback resumed its downward trajectory following a brief recovery spurred by the United States (US) Nonfarm Payrolls (NFP) report for June, released on Thursday.
- The US Dollar Index (DXY) attracted modest buying interest after headline NFP figures showed stronger-than-expected job additions, with 147,000 new jobs created in June—surpassing forecasts of 110,000 and slightly above the revised May figure of 144,000. However, a deeper look into the report revealed a stark contrast between public and private sector hiring.
- The private sector added just 74,000 jobs in June, down sharply from 137,000 in May and well below the three-month average of 115,000. In contrast, the public sector accounted for the bulk of the gains, adding 73,000 jobs compared to just 7,000 in the previous month. This imbalance underscores a growing reluctance among private firms to hire, amid ongoing uncertainty surrounding President Donald Trump’s renewed tariff policies after returning to office.
- Supporting this concern, ADP’s chief economist Nela Richardson noted earlier this week that June’s private sector job losses stemmed from a “hesitancy to hire” and “reluctance to replace departing workers.” ADP data showed that private businesses cut 33,000 jobs in June, reinforcing the fragile state of the labor market.
- This deterioration in labor conditions is likely to influence the Federal Reserve's (Fed) policy stance. Several Fed officials have recently signaled the need for proactive measures to support employment. “The Fed should not wait for the job market to crash in order to cut rates,” warned Fed Governor Christopher Waller in an interview late last month.
- Despite this dovish tone, stronger-than-expected headline NFP figures prompted traders to scale back expectations of a near-term rate cut. According to the CME FedWatch Tool, the probability of a Fed rate cut in July dropped sharply to 4.7%, down from 23.8% just a day before the NFP release.
Technical Analysis: USD/INR Holds Near Support at 85.00
The USD/INR pair opened Friday's session trading within Thursday’s range, continuing to consolidate after Thursday’s sharp decline. The pair came under pressure after breaking below the tight consolidation zone between 85.56 and 86.00, which had held from June 30 to July 2.
The short-term outlook remains bearish, with the pair trading below the 20-day Exponential Moving Average (EMA), currently around 85.70. This indicates a continued downward bias.
Adding to the bearish sentiment, the 14-day Relative Strength Index (RSI) remains below the neutral 50.00 level, suggesting a lack of bullish momentum.
On the downside, immediate support is seen near the May 27 low at 85.10, with a potential drop toward the 85.00 psychological level if selling pressure persists. On the upside, a move above Wednesday’s high at 86.13 would be needed to challenge the bearish outlook and signal a potential reversal.
