Fundamental view

The Rupee weakened in early deals on Friday, on worries that foreign funds would resume dumping their holdings in local shares following the country's biggest corporate scandal. U.S. Dollar Trading continued to weaken as the market factored in a weak data for the US ahead of Fridays Unemployment numbers. Weekly Jobless Claims fell for a second week at 467K vs. 491K previously. Of concern was November Consumer Credit which dropped -7.94bln. In U.S. share markets, the NASDAQ was up 17 points (1.12%) and the Dow Jones was down 27 points (-0.31%). . The Euro surged as the market sold the Dollar although it did come under pressure against JPY which rose on risk aversion. Was range bound against the resurgent GBP with the 90 level attracting attention. Q3 GDP was confirmed at -0.2%. Unemployment ticked higher to 7.8% as expected. November German Factory Orders plummeted -6.0% adding to concern over the German Economy. Looking ahead, Eurozone Retail sales are forecast at 0.0% vs. -0.8% previously.· The Japanese Yen continued to pullback on the USD/JPY as the markets reacted to stock weakness in Asia and crosses were heavy lead by the AUD/JPY and other higher yielding pairs. Support at 91 proved solid overnight and the market awaited tonight’s US jobs data. The Sterling rallied as the market bought GBP after the BoE cut only 0.5% with some looking for a bigger 1.0% cut. USD weakness helped cable higher but weak stocks capped GBP/JPY rallies. Looking ahead, December PPI input forecast at -2.2% m/m and PPI output -0.7% m/m.· The Australian Dollar tested 0.7000 as risk aversion and weak stocks hurt AUD sentiment. USD weakness and a recovery in Gold allowed the AUD to reclaim the 0.7100 level. The November Trade Balance fell 1.45Bn from 2.96B previously. Also weak, November Building approvals which dropped 12.8% vs. -3.1% previously.