US retail sales were unexpectedly flat in April against the expected 0.4 per cent increase, providing one more reason to bet that the Fed will reduce interest rates. Control retail sales fell 0.3 per cent on-month.

Control retail sales, which are used to help calculate GDP, have been negative in three of the first four months of this year, ANZ Bank pointed out.

The dollar index and the 10-year U.S. Treasury yield were down to their lowest in more than a month, while US equities rallied. Futures are pricing in two interest rate cuts this year.

The Korean won and the Thai baht led Asian currencies higher, climbing 1.5 per cent and 0.8 per cent, respectively. Asian equities followed their US peers higher and futures on the S&P 500 Index rose more.

“Well, we have a number of positive cues (for the Indian rupee). While you will obviously not expect to see the kind of move that Asia has, let’s see if we can at least move past the 83.35-83.40 region,” an FX trader at a bank said.

The upside in the South Asian currency is expected to be capped by the ongoing nervousness about the India election outcome, which is prompting foreign outflows. Foreigners have withdrawn more than $3 billion from Indian equities in nine sessions in May so far, NSDL data shows.