INDIA: USD/INR Pares Post-Payrolls Decline, Putin Hosts Modi

Asian currencies crept higher against the greenback after Friday’s payrolls data, though USD/INR pared the majority of the initial gap lower throughout APAC trade and looks set to end the session near Friday’s closing levels.

• Chinese and HK equities traded lower (Shanghai Comp fell for a 4th consecutive session) on signs of a more interventionist approach on the short-end of the rates curve from the PBOC - part of a broader attempt to cap the local bond rally in China. That led to a slight correction lower for the Sensex and Nifty indices, though both remain within close proximity to record highs.
• Meanwhile, data showed overseas investments into India’s sovereign bonds slowed for a second straight week - to INR 35.9bn in the week through July 5 from INR 46.6bn the week prior.
• As a reminder, Russia’s President Putin is hosting Prime Minister Modi for the first time in five years. According to Bloomberg, no major announcements are expected from the visit but it is set to highlight that the relationship between the nations remains strong.
• CPI data on Friday is the key release of the week, though little change to the headline figure of +4.75% Y/Y is expected. Morgan Stanley note that food (driven by higher prices of vegetable and pulses) and core inflation are likely to pick up marginally, while fuel inflation is likely to decline at a slower pace.