Evening report-jul 21.

The Indian unit moved in a narrow range as dollar demand from importers offset supply from exporters.Market witnessed large buying by companies, with rupee moving in a narrow range ahead of the United Progressive Alliance government's vote of confidence.Dollar continued to be weighed down on concerns about the health of the U.S. financial sector ahead of earnings reports from regional banks, while investors focussed on a proposed rescue plan for Fannie Mae and Freddie Mac. EURUSD traded mixed and tested offers around 1.5907 and was supported at 1.5830 The Euro-Zone trade balance turned to a deficit of 4.6 billion from a surplus of 2.5 billion as a strong Euro weighed on exports and rising oil prices saw the energy deficit climb to 99.7 billion. Meanwhile the German producer prices in June rose to 6.7%. Rising inflation continues to be a concern for the ECB, but the slowing growth in the region may prevent the central bank from further rate hikes.USDGBP traded mixed and tested offers around 1.9980 and was supported at 1.9905 as the U.K. M4 money supply increased 2%. Meanwhile the public sector net borrowing decreased to 9.2B as credit markets remain sticky. The inability of borrowers to get mortgages has continued to depress the housing sector, which has dragged the country to the brink of a recession. USDJPY traded on a bull note and tested 107.13 as Japan nationwide department stores sales fell 7.6 % in June after a 2.7 decline the month prior. It was the largest decline on record dating back to 1997. A 14.6% fall in clothing sales led the way, as consumers have tightened their wallets in the face of rising inflation and a slowing economy. Indeed, BoJ Governor stated that the central bank weighs downside risks to growth and upside risks to inflation equally, leaving the MPC with no policy direction.