• Spot rupee closed at 85.99/00 to a dollar level after opening at 85.59/60 level. The rupee fell sharply after breaking below 85.75 level, on rumours of state run bank buying, purported for government payments amid losses in equity markets. Equity markets today closed about 0.8 lower. Data released today showed HSBC's Flash India Composite Purchasing Managers' Index rose to 61.2 this month from April's 59.7 - the sharpest rate of increase since April 2024 and confounding a Reuters poll median forecast for a dip to 59.5.
• DXY is trading a tad higher at 99.73 level. USD remains weak on concerns of rising US trade and fiscal deficit while talk on tariffs are going nowhere. On the trade front, tensions remain high. Japan’s Finance Minister Katsunobu Kato labeled recent US tariffs as “regrettable” and reiterated Tokyo’s position that no trade deal would be worthwhile unless automobile duties are scrapped. At the G7 meeting in Banff, Kato and US Treasury Secretary Scott Bessent agreed that the dollar-yen exchange rate should reflect market fundamentals. However, the lack of concrete progress raises doubts over any near-term breakthrough in US-Japan trade talks.
• EURUSD eased below 1.13 level after poor PMI numbers. Eurozone’s private sector returned to contraction in May, with PMI Composite falling from 50.4 to 49.5, a six-month low. The drag came from the services sector, where the PMI dropped from 50.1 to 48.9, its weakest reading in 16 months. While the manufacturing index rose modestly from 49.0 to 49.4, marking a 33-month high, it remained in contractionary territory. The modest improvement in Mfg. index is due to front ending of manufacturing ahead of the tariff implementation. In other data, Germany’s Ifo Business Climate Index rose to 87.5 in May, up from 86.9 in April, offering cautious optimism that the economy may be stabilizing.
• From UK, in May, the PMI Services rose modestly from 49.0 to 50.2, while Mfg. PMI edged lower from 45.4 to 45.1. As a result, the Composite PMI ticked up from 48.5 to 49.4, still below the 50-mark that separates expansion from contraction. Business confidence has improved since April, helped in part by easing trade tensions. However, output across the private sector shrank for a second consecutive month, suggesting that the UK economy may be slipping into contraction for Q2.
• Important data releases scheduled today: US: Weekly Unempl. Claims; EZ: Belgian NBBBusiness climate index; US: Flash Mfg. , services PMI; Existing Home sales;

Spot rupee opened at 85.59 levels to a dollar level compared to 85.64/65 previous close.

DXY fell for the third successive day and is trading lower at 99.48 level today, its lowest level in two weeks, as traders focused on the G7 finance ministers’ summit for signals whether the US administration might tolerate a weak USD. USD decline accelerated against the JPY and South Korean amid speculation that the US officials would talk about currency talks with the respective countries. At the same time, fiscal worries in the US are growing. President Trump has been urging Republicans in Congress to unite behind a sweeping tax-cut bill, but has so far failed to sway key holdouts who could block the legislation.