Evening Report-dec 29.

Rupee trimmed losses and 48.42 as gains in the domestic equity market helped sentiment but month-end dollar demand from oil refiners likely prevented a very steep rise.An empty economic calendar will leave dollar price action at the mercy of risk flows today. Despite a bout of risk aversion due to violence in the Middle East the dollar didn’t benefit from the increased risk aversion which saw oil and gold shoot higher. The thin holiday trading could lead to increased volatility as institutional buyers have a greater impact on price action. Bargain hunting could drive equity markets higher today and the resulting risk appetite may weigh on the greenback. Additionally, as the dollar continues to trade more on fundamentals the weak holiday shopping season may lower growth expectations for 2009 and add to dollar selling. The Euro rallied above 1.4350 on comments from German Finance minister and on French GDP showing growth in the third quarter. The German finance minister told that Germany is situated to handle the current economic crisis and that the country has yet to decide on the size of the next stimulus package that is expected in January. Meanwhile, the final 3Q French GDP reading confirmed the preliminary print of 0.1% growth. Signs that the Euro-zone’s two biggest economies are proving to be more resilient than expected, has lowered expectations that the ECB will resume its current easing policy. Falling oil prices and inflation led to an increase in French consumer spending which drove growth in the third quarter offsetting declining manufacturing activity. The Pound pared earlier gains dropping over 100 points, as the outlook for consumer spending took a significant blow. The declining housing market has also added to the decline in wealth, which led to Britons putting in £5.7 Billion into their homes according to the BoE housing equity withdrawal report. It was the most since records began in 1970 signaling that spending on big ticket items like cars and vacations will halt as households refrain from pulling equity from their homes. Dollar slid versus the yen on concern of Middle East Violence which may disrupt oil supplies to the U.S .Yen Surges High before housing and manufacturing reports this week that may show the world’s largest economy is slipping further into recession