Evening Report-sept 16.

The rupee ends at 46.93/46.94 per dollar, from the previous close of 46.05/06, hit by concerns about capital outflows from the local share market which was offsetting dollar sales by state banks. U.S. docket is filled with event risk in addition to the troubles of the financial sector. Inflation data is due out which is expected to show a slight easing of prices as falling oil prices have reduced energy costs. The diminishing threat of price pressures may add fuel to speculation that the Fed will cut rates at its rate decision today. Credit Suisse Swap Index is also pricing in 23 bps worth of cuts,a dovish statement following the decision could add to the dollar’s recent weakness. However, dollar bulls have to be encouraged that the greenback has held up despite the historic events that have transpired, which could set up for continued strength once the panic eases. Euro has remained range bound as investors sit on the sidelines with the troubles of the U.S. financial system continuing and a Fed rate decision on tap. The EURUSD spent most of the overnight trading session trading between 1.4304-1.4160. A better than expected ZEW Survey reading failed to spark any bullish price action as German investor confidence improved to 41.1 from -55.5, which far exceeded the -53 that was expected. Pound was similarly range bound trading between 1.7782 and 1.8000 despite inflation continuing to increase. Consumer prices rose to 4.7% from 4.4% which will require BoE Governor King as to why the 3% threshold was breached for another quarter. British housing sector is in dire straits. USDJPY has seemed to have found support at 103.60 as the pair has risen back above 104.50 since bouncing from that price level. Risk aversion is still dominating that market but a possible solution for AiG’s troubles has eased some of the panic that has gripped the markets.