Rupee may inch up tracking Asia FX following mixed US jobs report

Rupee is likely to open marginally higher on Monday on the back of an uptick in most Asian currencies following a US jobs report that did not move expectations much around the Federal Reserve's interest rate outlook.

Non-deliverable forwards indicate rupee will open at around 83.10-83.12 to the US dollar compared with 83.15 in the previous session. The rupee is looking to extend its three-day winning run.

The rupee has had "a bit of an unexpected" move higher and "Asia managing a recovery" will "help keep up the momentum", a fx spot trader at a bank said.

Considering how range-bound the rupee has been, "it's completely acceptable to be optimistic" based on how it has done in the last few days.

Asian currencies were mostly higher to begin the week, with investors digesting a mixed US jobs report. US employers hired more workers than expected in December and wages increased more than expected, but the number of jobs added in the previous two months was revised lower. The unemployment rate was unchanged at 3.7 per cent.

"Solid employment additions, low unemployment and sticky wages suggest no immediate need for Fed rate cuts," ING Bank said in a note.

Nonetheless, the jobs market is cooling, ING added, pointing to the past two months of payrolls data being revised lower by 71,000 and the 3-month moving average continuing to moderate.

ING reckoned the Fed will wait till May before cutting rates.

US inflation data is due on Thursday, providing investors direction on when the Fed will deliver its first rate cut.

Asian currencies were up 0.1 per cent to 0.3 per cent and the dollar index dipped to 102.40. The weak US services data released following the jobs report undermined demand for the dollar.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 83.20; onshore one-month forward premium at 8.50 paisa

** Dollar index down at 102.40

** Brent crude futures down 0.8 per cent at $78.2 per barrel

** Ten-year US note yield at 4.05 per cent

** As per NSDL data, foreign investors bought a net $166.8 mln worth of Indian shares on Jan. 4

** NSDL data shows foreign investors bought a net $87.6 mln worth of Indian bonds on Jan. 4