Evening Report-Feb 13.

Rupee ends at 48.67 levels extending the gains against the U.S. dollar as banks persistently sold the greenback noting its weakness against major currencies. However dollar demand from oil companies and other importers capped a further rise in the Indian unit. President expressed confidence that the stimulus measures taken by the government would drive demand for goods and services reviving production activities in manufacturing as well as service sectors.The prospect of a new plan to help stem foreclosures helped reverse market sentiment at the end of the U.S. session and the increase in risk appetite has continued through overnight trading. The mortgage plan and the stimulus plan finally getting passed may be the catalyst to send equity markets higher which could lead to dollar weakness. The gathering of the leaders of the developed nations isn’t expected to focus on currencies but it still provides potential event risk. The U of Michigan consumer confidence report is expected to show that consumers have become les optimistic which could negatively impact consumer spending going forward. The mounting job losses have led Americans to retrench and their conservative spending habits will remain a weighing factor of domestic growth. Euro would reach as high as 1.2940 on the back of increased risk appetite and short covering ahead of the G-7 meeting and the prospect of more initiates from the U.S. government. However, the German GDP reading of a -2.1% ended bullish momentum as it increase the chances of more rate cuts from the ECB. The largest contraction in 22 years for the regions largest economy would drag the economic unions growth number down to –1.5%. Euro-zone GDP contracted for the third straight quarter . The dour growth numbers has increased the chances that the central bank will cut rates by at least 50 bps at their March meeting. The lower interest rate expectations will continue to be a weighing factor for the Euro but increasing risk appetite has keep the single currency supported which may keep in stuck in its recent range of 1.2700 – 1.3100. Pound soared over 250 bps to as high as 1.4600 on the back of the increasing risk appetite as it erased the majority of the losses it suffered following the BoE’s quarterly inflation report. Indeed, the central bank signaling further rate cuts and the possibility of quantitative easing had sunk Sterling to as low as 1.4150. The potential of more coordinated efforts to revive the global economy coming from the G-7 meeting has fueled the bullish Sterling sentiment. However if the current every man for themselves mentality continues post summit then we could see recent gains reversed. Japanese yen fell against the US dollar paring a weekly advance and found a resistance at 91.80 as stocks rose on speculation governments will expand efforts to revive lending.currency declined amid speculation the Obama administration will use government cash to cut borrowing costs for homeowners.