Evening Report-April 27.

The Indian rupee closed at 50.23 lower after having risen for seven straight weeks, as a see-sawing share market failed to provide clarity on fund flows, while a stronger dollar overseas also hurt.The dollar traded higher throughout the majority except against the yen as the unknown attached to the "swine flu" has fueled risk aversion. We have started to see the greenback give back some of its gains as the extra-ordinary factor may have limited impact on broader sentiment. However, concerns over growth and the bank stress test may keep traders cautious going forward. A light fundamental calendar will leave the dollar at the mercy of the broader themes today but the FOMC meeting and the first quarter GDP report will provide event risk latter in the week. The Dallas Fed manufacturing report is the only release scheduled to hit the wires and it is expected to show a mild improvement to -46.0% from -49.0%. Dow futures continue to trade down over 100 points, and a weak day on Wall St could continue to lend support for the dollar. The Euro continues to remain under pressure as traders continue to unwind risk positions sending it back below 1.3219 to an intraday low of 1.3119. The economic docket demonstrated the two themes that are currently prevalent in the economic region growing confidence and declining prices. The German Gfk consumer confidence reading held steady at 25 for a third month as it beat estimates for a decline to 23. The sentiment reading follows improvement in the PMI and IFO business gauges as confidence is starting to improve on the back of the ECB’s increasingly accommodative monetary policy and the individual stimulus packages by the various countries. Meanwhile, the German import price index to -7.1% from -6.4% in February as declining oil costs continues to drive down inflationary pressures. Deflation concerns will remain as longs as price continue to fall and the economy lacks clear signs of growth returning. Therefore, expectations are t hath e central bank will lower their benchmark rate by another 25 bos and initiate non-standard measures over their next two policy meeting, which could become a weighing factor for the single currency. Pound has also continued to remain under pressure as it fell to an intraday low of 1.4514 . The hopes of a recovery in the U.K. housing market were put on hold when Hometrack reported that home prices fell for a 19th month by 0.3% bringing the annualized reading to -10.1%. Additionally, the BBA loans for home purchases measurement declined to 26,097 from 28,024 in March. The BoE continues to purchase debt in hopes of loosening credit markets, but if those results don’t begin to start to show results we may see fears grow that more downside risks remain for the country’s economy which could start to weigh on sterling. Yen has been the main story as the currency has re-established its safe-haven status with the potential "swine flu" pandemic sending cautious investors to the sidelines. The fact that the health concerns are based in the Western hemisphere has heightened concerns as it could negatively impact the U.S. economy where the most stimulus has been enacted and is the expected source of growth to help stem the current global downturn. USD/JPY reached as low as 96.46 leaving the March 30th low of 95.94 as the next support level. There is a risk that market sentiment could return their focus back toward fundamentals, but that may not change sentiment as the pending results of the bank stress test and the gloomy outlook painted by the IMF for the global economy may still lead traders to avoid risky assets.