Evening report

Firming equity markets and fall in global crude oil prices led the Indian rupee to surge further by 23 paise to 42.01/03, against the greenback in early trade.The dollar hit a seven-month high as a signal from the Federal Reserve that interest rates would stay low for some time lifted U.S. stocks and offered hope that its policy would support the U.S. economy.EURUSD slide against dollar and tested a low of 1.5450 levels as German factory orders fell for the seventh month in June creating speculation that the economy contracted in the second quarter. Manufacturing faltered 2.9 percent amid high food and energy costs pushing up the cost of production. GBPUSD tested a low of 1.9521 as U.K. consumer confidence posted its largest decline in four years, dropping 11 points to 51. Confidence continues to decline amid the housing slump, unemployment on the rise, higher living costs, and inflated prices. Despite talks of a recession and inflationary pressures Bank of England is expected to leave its rates at 5.00 percent, for the fourth consecutive month. USDJPY rose to 108.67 levels as the coincident index fell to 101.7 in June from 103.3 in May. The leading index showing the economy is showing downside growth potential. Japanese government has acknowledged that stagflation is beginning to set in, ending Japan’s post war expansion. slowdown is expected to be moderate as companies have dismissed additional workers and exports are boosted to emerging markets, removing the risk of recession.