The Indian rupee is expected to start Wednesday on a positive note against the US dollar, tracking declines in American Treasury yields and the greenback following weaker-than-expected US jobs figures.
According to forex traders, the local unit may open around 82.60 per dollar compared to its previous close of 82.7050. The risk-on sentiments have improved after US job openings unexpectedly fell in July.
The surprise drop in US labour demand reignited hopes that the Federal Reserve may not need to tighten policy as aggressively as thought. This triggered a selloff in the dollar index and a retreat in 2-year and 10-year Treasury note yields.
The weaker data also reduced bets of another Fed rate hike by November to under 50%, down from near 70% levels earlier this week. Disappointing US consumer confidence added to downside momentum.
However, traders warned the rupee's gains may be limited as markets wait for more clarity on the outlook for Fed policy tightening from Chair Jerome Powell over the coming months. Overall weakness in domestic stock markets also pose risks.
