Evening Report-May 29.

The Rupee strenghtened to its highest and closed at 47.10 following gains of over 2 per cent in the domestic shares and a sharp fall in the dollar versus major currencies overseas. India's economy grew a faster than expected 5.8 percent in the March quarter from a year earlier, as a still strong services sector offset a decline in manufacturing.The annual growth for India's fiscal fourth quarter was above a median forecast of 5.2 percent but sharply lower than the year-ago quarter's 8.6 percent expansion.The manufacturing sector contracted 1.4 percent in the January-March quarter from a year earlier, while farm output grew an annual 2.7 percent.The dollar remains under pressure as it continues to be hindered by the reversing of the risk trade. A jump in Japanese industrial production added to the improving global picture which could continue today with the U.S GDP reading. Forecasts are for the second reading of growth in the U.S. to be revised higher to -5.5% from -6.1%. A 51.8% decline in private investment was cited as the main driver of the contraction, so look for a revision of such a large shortfall. Chicago PMI and University of Michigan consumer confidence are also expected to show improvements which will add to building optimism of a recovery and could continue to weigh on the dollar.The Euro continued to find support overnight as it set a new yearly high of 1.4091 on the back of an improvement in April German retail sales and rallying equity markets. Consumer consumption in the Euro--zone’s largest economy rose for the first time in four months, increasing by 0.5% following a 0.4% decline the month prior. Warmer weather and Easter holiday shopping helped increase demand but may have skewed the figures. Meanwhile, forex traders ignored a record low Euro-zone CPI-estimate report which showed that inflation is expected to fall to 0.0% in April following 0.6% the month prior. The central bank may not be too concerned with falling prices and deflation concerns now as this was evident by comments from ECB member Vitor Constancio who stated that "For two years we won't be close to the official goal for inflation," but" there aren't significant risks of a deflationary spiral." Nevertheless, falling prices will continue to shrink profit margins for companies which are now facing increasing input costs which could lead to more job losses going forward.The pound continues to trade higher as a rebound in home prices and increasing risk appetite has pushed the GBP/USD back above 1.6000 to reach above the 5/27 high of 1.6079. Nationwide LLC showed that house prices rose 1.2% in May as thawing credit markets have started to fuel demand. The BoE continues their quantitative easing efforts in hopes of driving down interest rates and providing liquidity to the market. Meanwhile, the Gfk consumer sentiment reading remained unchanged at -27 as Britons continue to look for positive signs that the recession is bottoming. If the housing sector stabilizes then we could see a sharp pick up in optimism which will only add to the current sterling bullish sentiment. The next resistance level is at 1.6148 the November 5th, 2008 high, trades should be cautious as the 38.2% Fibo level of 2.0160-1.3494 at 1.6048 is a formidable resistance level and without a clean break above downside risks will remain. JPY traded on a softer footing during the Asian afternoon after it responded to a series of weak Japanese releases, although there was one positive after industrial output posted its biggest monthly rise in by 5.2%. USD/JPY remained on the backfoot in the Asian morning amid general dollar weakness but weak Japanese data and persistent speculative activity via the JPY crosses saw it make a gradual back up to 96.75-80, where it currently trades.Yen should hold up in this environment but an overhang of exporter selling interest and talk of real money hedging above 97.00 could hamper movement along with general dollar supply.

Yen weakened after Moody's rating-May 29.

Japanese Yen weakened considerably in the Asian session after the affirmation of the US AAA rating from Moody’s. The pair trading above 96 and didn’t stop until sellers above 97 put a cap on the rally. Crosses were also very buoyant on the back of US stocks and are all nearing year highs. A major source of Yen selling was that Japanese Investors were looking for higher yields outside of Japan. Looking ahead, April Industrial Output is forecast at 3.2% vs. 1.6% previously.

Technical Outlook:
R1: 97.30 S1:95.90
R2: 97.50 S2:95.70
Yen chart is expected to have a small downside consolidation for the day . With the trading range between 96.10-97.20 levels. Stochastic and Relative strength index are holding on the bull trend and momentum is also pointing up hinting a bull run.

Euro and sterling rebounded sharply against dollar -May 29.

Euro rebounding sharply from the 1.300 level grinding higher in the US session. Talk in Europe about future ECB policy focused on whether the 1.0% rate is the floor. German Unemployment data beat expectations at 1K vs. 66K forecast. Looking ahead, April German Retail Sales are forecast at 0.0% vs. -1% previously. May EU Flash Inflation is forecast at 0.2% vs. 0.6% previously y/y. . Sterling traded briefly above the 1.6000 level but ran into a wall of offers and pulled back. CBI distributive trades fell to -17 vs. -10 forecast. GBP/JPY was incredibly well supported traded at fresh year highs of 155 Yen. EUR/GBP gave up some of the gains seen yesterday. Looking ahead Nationwide House Prices are forecast to fall -0.9% vs. -0.4% previously

Technical outlook:

EURO R1: 1.4050 S1: 1.3850
R2: 1.4080 S2: 1.3820
Chart pattern shows a bullish note for the day. With the trading range of 1.3890 -1.4040 levels for the day. Stochastic is seen trending up and market is trading above the moving average giving bullish outlook and the view is also supported by momentum.

GBP R1: 1.6080 S1: 1. 5850
R2: 1.6100 S2: 1. 5830
Chart pattern is expected to be on a bullish note for the day and is expected to trade in the range of 1.5870-1.6060. Stochastic and momentum are seen trending up but the currency is also trading above the moving a confirming the trend.

Rupee gained on the back of weak USD-May 29.

The Rupee gained for a third successive session buoyed by sharp losses in the dollar versus major currencies, but traders were awaiting the opening of the domestic share market for further direction. U.S. Dollar enjoyed another brief bounce in the Asian session as investor concerns about the GM bankruptcy and weak stocks weigh on sentiment. The main source of gains was against the Yen which came under heavy selling pressure as moody affirmed the US AAA Bond rating. US data was mixed with weekly jobless claims improving to 623 K but New Home Sales remaining weak at 0.352M vs. 0.36M forecast. Looking ahead, Q1 GDP is expected to be revised to -5.5% vs. -6.1%.

Technical outlook:

USDINR is expected to give a downward correction for the day. With the trading range between 47.25-47.70 levels for the day. Good support is seen at 47.20 levels and key resistance is seen at 47.78 levels. Stochastic is trending down and the currency is also seen trading below the moving averages giving bearish outlook.

Evening Report-May 28.

Indian rupee reversed losses and closed at 49.60 levels as gains in domestic shares fueled hopes for capital inflows, but a sharper rise was prevented by the dollar's gains versus other majors overseas. India's wholesale price index rose 0.61 percent in the 12 months to May 16, matching the previous week's annual rise. It has been a mixed bag for the dollar as its earlier gains against the Euro and pound have been reversed and it continues to see momentum versus the Yen. Scanning the headlines you can see the conflicting sentiments as surging bond yields are causing fear that government efforts aren’t working and will reduce the chances of a recovery, while improving fundamental data and optimism is increasing its chances. The expected 0.5% rise in U.S. durable goods orders should add to the improving outlook for a global recovery which could weigh on the dollar as risk appetite picks up. U.S. futures are pointing toward a higher open despite the weakness in Europe which may be in anticipation of the positive fundamental data. Initial jobless claims and new home sales are also due for release and are forecasted to improve mildly which will add to the increasing optimism. Euro reached as high as 1.3885 on the back of a positive labor report which showed unemployment easing back to 8.2% from 8.3% as the economy only lost 1,000 jobs. Economist were expecting German companies to slash 64,000 workers from their payrolls as falling demand for exports continues to weigh on revenues. Meanwhile, the retail PMI indicator fell to 47.1 from 48.4 as weak labor conditions in the region continues to cause consumers to retrench. This was evident as the Euro-zone consumer confidence reading remained unchanged at -31. However, economic confidence which is the more closely watched figure improved to 69.3 from 67.2 as low interest rates and government spending is raising the outlook for future growth. The single currency reversed some of its losses from yesterday and continues to find support after the unemployment figures .The stabilization of the German labor market will go a long way in helping the Euro-zone get back on track and adds to the positive signs that the recession is bottoming. After posting a low of 1.5850 Cable rose and is trading at 1.5949 levels with not much data in hand. USD/JPY continued it s bullish momentum through Asian trading which pushed the pair just shy of the 200-Day SMA at 97.20. Japanese demand for dollar denominated assets on the back of an improving outlook for the global economy has been a steady driver of price action. The Yen didn’t receive any support from an improvement in retail trade of 0.6% in April. The improvement in domestic demand is another sign that confidence is rising in the country. Therefore the demand for carry start is expected to pick up which could signal more weakness ahead for the Yen.

Yen Weakens as Japanese Investors May Buy More Overseas Assets -May 28.

Japanese Yen kept to a very tight range as the USD strengthened and Yen weakened broadly together. Most of the crosses were under pressure from the rise in risk aversion although USD/JPY was very well supported on dips under 95. April Retail Sales are forecast at -2.9% vs. -3.3%.

Technical Outlook:

R1: 96.80 S1:95.30
R2: 96.90 S2:95.20
Yen chart is expected to have a bullish move for the day . With the trading range between 95.40-96.70 levels. Stochastic and Relative strength index are seen trending up and momentum is also pointing up hinting a bull run.

Euro and pound fell on profit taking-May 28.

Euro struggled at the 1.4000 level before falling heavily in the final hours of the day on the back on rising US yields. The pair fell to 1.3850 but speculated support failed to appear and the slide continued into Thursday. Also hurting the sentiment was a FDIC report with a negative outlook on US loan quality. German CPI fell to 0.0% on a y/y basis. Sterling broke comfortably back above 1.6000 the highest level since January as EUR/GBP selling and the UK mortgage industry showed signs of rebounding off November lows. The late equity pull back saw the 1.6000 handle being given up on profit taking. Further gains will require the continuing recovery of global financial system.

Technical Outlook:

EURO R1: 1.3980 S1: 1.3730
R2: 1.4020 S2: 1.3720
Chart pattern shows a bearish note for the day. With the trading range of 1.3750 -1.3950 levels for the day. Stochastic is seen trending down and market is trading below the moving average giving a bearish outlook and the view is also supported by momentum.

GBP R1: 1.6040 S1: 1. 5800
R2: 1.6050 S2: 1. 5760
Chart pattern is expected to be on a bearish note for the day and is expected to trade in the range of 1.5820-1.6020. Stochastic and momentum are seen trending down from the overbought area but the currency is trading on the moving average only break below it can confirm the trend.

Rupee fell past 48 to meet the month end demand-May 28.

The Rupee fell past 48 per dollar to its lowest in nearly two weeks as the US unit gained against other major currencies while dollar demand from importers to make month-end payments also weighed. U.S. Dollar tested new lows in the Asian and European sessions before rebounding sharply into the close of the day. US stocks sold off in the afternoon on the back of rising US Treasury Yields hurting investor sentiment in stocks and Commodities. Existing Home Sales are forecast at 4.68M vs. 4.65M forecast. Crude Oil finished up $2.20 to finish the day at $63.20 a barrel. Looking ahead for Weekly Jobless Claims are forecast at 630k and New Home Sales are forecast at 0.36M vs. 0.356M previously.

Technical Outlook:
USDINR is expected to give bullish move for the day. With Good support seen at 47.22 levels and key resistance is seen at 48.20.Currency is expected to trade in the trading range of 47.78- 48.12 levels for the day. Stochastic is seen trending up and Market is trading above the moving average level bullish outlook but since it is trading on the upper band so possibility of downward correction cannot be ruled out .

Evening Report-May 27.

The Indian rupee traded higher in afternoon session and closed at 47.70 levels as gains in domestic equities raised hopes of more capital inflows and higher Asian units also underpinned sentiment. The dollar continues to remain under pressure as the optimism fueled by the jump in U.S. consumer confidence yesterday has carried through Asian and European trading sessions. The improvement in sentiment overshadowed a decline in the S&P/Case Schiller home price index which could get more weight today if the existing home sales indicator confirms weakness in the housing sector. Additionally, the home price index is expected to disappoint the S&P Case Schiller report with a 0.2% gain. A positive housing report will add to the improving outlook for a economic recovery and could add to the bearish dollar sentiment. The Euro regained its footing after falling to an intra day low of 1.3927 after the EUR/USD failed to hold above 1.4000 which continues to serve as formidable resistance. Equity markets higher in Europe are helping support the pair as risk appetite continues to rise following the rally in U.S. market yesterday. A slight increase in French consumer confidence to -40 from -41 continues the trend of increasing optimism which was reinforced by the improvement in business sentiment to 72 from 71. However, the outlook for production significantly declined to -50 from -16 which should be a concern and may be a sign that future growth is still in the distance for the region. ECB member Noyer testifying in front of the French Senate’s finance committee stated that the banking system still has the consequences of the credit crisis ahead of it which leaves potential risks for borrowers. The Pound reached above the 1.600 price level for the first time since November, 2008 as the Sterling continues to benefit from improving optimism but failed to hold the level . Banks in the U.K. approved 27,685 new mortgages in April which missed estimates of 28,000 but was an improvement from the 26,671 the month prior. The housing sector continues to show signs of lift which is helping to put a bottom on the current downturn. The Yen saw some brief support as the merchandise trade balance turned from a deficit into a surplus of 69.08 billion in April. The country saw the rate of decline of its exports slow to -39.1 from -42 which markets took as a sign that the country’s recession is easing. Additionally, small business confidence rose for a fourth month which is another positive sign for growth as they account fro the majority of hiring in the country.

Euro fellon political concerns but sterling rallied-May 27.

The Euro fell as stocks and sentiment soured in Asia on the back of saber rattling from North Korea which launched missile tests to back up the nuclear test on Monday. The fall from 1.4000 tested support under 1.3900 before rebounding with US stocks. March Industrial Orders fell -0.8% vs. 0.8% forecast. . Sterling rallied sharply off European lows although settled comfortably below the key 1.60 level. The banking sector rebound is helping the Pound to recover faster than other currencies with London a major financial center.

Technical Outlook:
EURO R1: 1.4080 S1: 1.3830
R2: 1.4120 S2: 1.3770
Chart pattern shows a bearish note for the day. With the trading range of 1.3840 -1.4050 levels for the day. Stochastic is seen trending down and market is trading below the moving average but caution required as momentum is pointing up.

GBP R1: 1.6080 S1: 1. 5830
R2: 1.6090 S2: 1. 5780
Chart pattern is expected to be on a bullish note for the day and is expected to break up the psychological resistance level of 1.6000 and extend the movement till 1.6050 if not able to sustain above that level will take support at 1.5850. Stochastic and momentum are seen trending up from the overbought area and the currency is also trading above the moving average confirming the trend.

Rupee strengthened on hopes of capital inflows-May 27.

The Rupee strengthened snapping a two-day fall, as gains in regional share markets fueled hopes for capital flows into local shares. But month-end dollar demand is likely to limit a sharp rise. U.S. Dollar tested both sides of the market with early strength reversing sharply in the US. Better than expected May CB Consumer Confidence at 54.9 vs. 42 forecast was the main catalyst for the reversal. Concerns over demand for US bonds were lessened overnight as a large Treasury Auction was well received. The improvement in consumer confidence led to large gains in stocks and risk appetite improved. Looking ahead, Existing Home Sales are forecast at 4.66M vs. 4.57M previously.

Technical Outlook:

USDINR is expected to give sideways move for the day. With Good support seen at 47.22 levels and key resistance is seen at 47.95.Currency is expected to trade in the trading range of 47.30-47.90 levels for the day. Stochastic is seen trending down but only crossovers can confirm the trend. Market is trading above the moving average level giving sideways outlook.

Evening Report-May 26.

The rupee depreciated and closed at 49.92 levels on sustained demand from importers for the American currency coupled with a strong dollar in overseas markets The dollar has been supported throughout the overnight session on the heightened geopolitical risks and a declining outlook for a global recovery. The economic docket may not have a top tier release on tap, but the combination of housing, manufacturing and sentiment data could impact price action if they combine to tell the same story. A stabilizing housing market combined with the expected improvement in consumer confidence from 39.2 to 42.6 and a pick up in manufacturing activity in the Richmond and Dallas regions should raise the outlook for a U.S. economic recovery. Euro has steadily declined during post holiday trading as weak fundamental data and increasing risk aversion and the North Korean Nuclear test have combined to dragged the currency below the 5/22 low of 1.3888. Indeed the final German GDP reading remained unchanged at -6.1% as the country experienced its deepest quarterly contraction on record. A drop in exports which fell 9.7% was the main driver of the economic downturn as global demand continues to be impacted by the credit crunch. However the decline was revised higher from initial estimates of -11.7% which combined with the unexpected 0.5% increase in private consumption provides some hope that the economy is stabilizing. Meanwhile, industrial new orders in March unexpectedly fell -0.8% against expectations for a 0.8% gain. The decline in activity in the Euro-zone ends the trend of improving data for the region and could be a sign that any form of growth could be a ways off for the region. The pound has also been under pressure as it has felt the impact of declining confidence in a global recovery and the increased geopolitical risks. Indeed, North Korea is reported to have launched two more missiles following yesterday’s initial nuclear test which has been met with outrage by global leaders. Remarks from BoE member Andrew Sentence that it is too early to look for signs of growth has also added to the pound bearish sentiment. Japanese Yen is Supported By Political Fears. Currency rose after Yonhap News reported that North Korea carried out a missile experiment a day after conducting a nuclear test that provoked international condemnation.

Euro and Pound fell against dollar-May 26.

Euro orbited 1.4000 during the day with profit taking and risk aversion failing to make a lasting impact on the pair. USD weakness has allowed a resurgent Euro to make substantial gains over the last week. May German IFO Business Climate was at 84.2 vs. 85.5 forecast. Looking ahead for March Industrial Orders are forecast at 0.8% vs. -0.6% previously. . Sterling was little changed with the market recovering from Asian losses during a quiet day of trade. Reports that China FX managers were ‘negative’ on the Pound did little to dent the bullish tone the pair has recently developed.

Tech outlook:

EURO R1: 1.4080 S1: 1.3850
R2: 1.4120 S2: 1.3770
Chart pattern shows a bearish note for the day. With the trading range of 1.3870 -1.4050 levels for the day. Stochastic and momentum are seen trending down but caution required as market is trading on the moving average only break below it can confirm the trend.

GBP R1: 1.6000 S1: 1. 5730
R2: 1.6020 S2: 1. 5720
Chart pattern is expected to be on a narrow trade for the day as the band width is narrow.. With the trading range of 1.5740-1.5980 levels for the day. Stochastic and momentum are seen trending down from the overbought area and the currency is also trading on the moving average only crossovers can confirm the trend.

Rupee dropped on Month-end dollar demand from oil refiners -May 26.

The Rupee dropped for a second day tracking the dollar's gains versus major currencies overseas but traders were waiting for the domestic share market to open for further direction. Month-end dollar demand from oil refiners and importers was also likely to put pressure on the Currency. U.S. Dollar finished the day broadly unchanged as holidays in the UK and USA kept volume low. Some action was seen in Asia as news of a Nuclear test from North Korea caused risk aversion to notch higher. Gains were short-lived though as the market rebounded off post test lows. Looking ahead for May Consumer Confidence is forecast at 42 vs. 39.2 previously.

Technical Outlook:
USDINR is expected to give bullish note for the day. With Good support seen at 47.15 levels and key resistance is seen at 47.80.Currency is expected to trade in the trading range of 47.25-47.70 levels for the day. Stochastic is seen trending up from the oversold areas and the market is trading above the moving average level confirming the bull trend.

Evening Report-May 22.

The Rupee at 47.10/12 off an intra-day high of 46.90 after local shares see-sawed supported by the U.S. unit's weakness overseas. The dollar has been mixed after falling to the lowest level in 2009 and we may not get much in the form of volatility in the U.S. session ahead of the Memorial Day Holiday. However, we could see a spike in risk appetite as traders may be weary of heading into the holiday long the market, which could lead to dollar strength. However, after the S&P downgrade of the U.K., concerns that the U.S. AAA rating may come under scrutiny helped fuel the sell off of dollar assets . An empty U.S. calendar leaves Canadian retail sales as the biggest event risk for the U.S. Session. The Euro has started to see sideways price action after reaching as high as 1.3980 as the only fundamental data to cross the wires was Italian retail sales. Consumer demand rose 0.1% from February but decline by 5.2% for the same period a year ago. The growth picture in the region has started to improve as we saw the ZEW survey signal that optimism is improving. German IFO report will be the major event risk of the day with the U.S. and U.K. on holiday which could lead to traders starting to hedge against it today. The Pound has started to push higher following the inline GDP print which showed a -1.9% decline in growth for the first quarter and -4.1% on an annualized basis . The GBP/USD is back over 1.5840 after falling to as low as 1.5756 ahead of the report. The growth report showed that private consumption fell by 1.2% along with a 6.1% slide in exports which leaves very little sources of growth for the economy supporting the BoE’s contention that it is headed for a protracted recovery. The fact that the current downturn hasn’t accelerated as the first quarter contraction is equal to the last three months ending 2008 may add to prevailing sterling strength. However, the decline of household consumption along with a 3.8% drop in private investment will hinder any growth prospects which may start to see cable bears re-emerge. The dollar slid to two-month low against the yen after Japanese Finance Minister Kaoru Yosano said that the country is not thinking about intervention in the currency market. The remarks came as market players have started to suspect that Japanese officials may consider intervening to prevent further yen strength. The yen's surge to 13-1/2-year peaks dealt a heavy blow to the country's big exporters, but Japan has refrained from intervention.

Dollar Slides to 4-Month Low Versus Euro and Pound on U.S. Credit Concern -May 22.

Euro gained heavily with the market focusing on the USD. Gains in the Euro led the market higher with EUR/AUD and EUR/GBP also making solid gains. May EU PMI’s were slightly better than expected at 44.7 vs. 43.8 previously. The Euro is the second largest currency in the world and any threat to the USD will result in substantial gains for the single currency. Sterling had a very volatile day crashing after the S&P put the UK on negative watch. The pair found support at 1.55 and rebounded for the rest of the day to touch fresh week highs just below 1.5900. UK business investment fell 5.5% in Q1. . Looking ahead, Q1 GDP is forecast at 1.9%.

Technical Outlook:

EURO R1: 1.4035 S1: 1.3820
R2: 1.4040 S2: 1.3780
Chart pattern shows a range bound movement for the day. With the trading range of 1.3830 -1.4020 levels for the day. Stochastic and momentum are seen trending down but caution required as market is trading above the moving average and parabolic is also supporting bull note.

GBP R1: 1.6000 S1: 1. 5760
R2: 1.6020 S2: 1. 5740
Chart pattern is expected to be on a bullish note. With the trading range of 1.5780-1.5980 levels for the day. Stochastic and momentum are seen trending up though in overbought area . Currency is also trading above the moving average and Parabolic is also supporting the bullish note.

Rupee rose below 47on dollar weakness-May 22.

Indian rupee rose to a five-month high past 47 per dollar supported by the U.S. unit's weakness overseas and on hopes for a jump in foreign investment after the ruling coalition won national elections. U.S. Dollar fell heavily for the second day as concern for the US’s AAA rating saw investors dump the dollar. Weak US stocks did little to help and the link between the two has weakened. Weekly Jobless claims fell 12k to 631K this week. Crude Oil was down $1.01 a barrel to close at $61.05. Looking ahead, Fed Chairman Bernanke Speaks.

Technical Outlook:

USDINR is expected to give bearish note for the day. With Good support seen at 46.95 levels and key resistance is seen at 47.30.Currency is expected to trade in the trading range of 46.90-47.40 levels for the day. Stochastic is seen flat in the oversold areas and the market is also trading below the moving average level.

Evening Report-May 21.

Rupee ends at 47.37 taking clues from the weaker dollar overseas and weaker Asian bourses.Indian's headline inflation figures at 0.68%.The dollar has benefited in the past through the fundamental beliefs that the world’s most liquid currency was a key safe haven and that the US would lead the global economic recovery. Neither theme has been working in the dollar’s favor this past week.The U.K. downgrade added to the dour outlook by the Fed which could raise concerns over a global recovery and lend dollar support as traders look for safety. The FOMC minutes took the steam out of the improving outlook for the U.S. economy as they lowered their forecasts for growth in 2009 from a possible low of -2.0% to -2.5% and raised the upper bound of unemployment expectations to 9.2% from 8.5%. Therefore market is expected to take their cue from today’s fundamental data to see if it supports the central bank’s new estimates. The Philadelphia Fed manufacturing indicator is expected to improve to -18.0 from -24.4 which would be the highest in eight months. The increase in activity will help ease some fears but as long it remains in negative territory optimism will be limited. The leading indicator gauge is also expected to improve to 0.8% from -0.3% and record the first positive reading in almost two years. However, initial jobless claims are expected to remain above 600,000 signaling that the labor market will remain a drag on any potential recovery. .The Euro saw choppy price action as an improvement in the PMI reading help lift the single currency, but the pound’s freefall would reverse those gains. The euro zone's services and manufacturing sectors contracted less than expected in May lifting the composite index to a eight month high of 43.9. The pace of the decline in new orders slowed which could be a sign that the economy is stabilizing and with the added efforts of the ECB improving the outlook for a recovery. After reaching as high as 1.3837 the EUR/USD dropped to 1.3740 and remains choppy as traders weigh the improvement in the outlook for the EZ economy against the impact of the dour outlook for the U.K. on their economy. Indeed, many had felt that the Euro-zone was lagging their neighbor in their recovery and the downgrade of the U.K. raises questions for their economy. Pound sharply fell nearly 300 pips in the immediate aftermath of the S&P downgrading the outlook for the U.K. to negative from stable. The news overshadowed a better than expected retail sales print which kept the theme of improving fundamentals going for the economy. Consumer consumption rose 0.9% on a 3.5% gain in non-specialized stores. Also, an 11.9% increase in apparel sales from a year ago pushed the annualized figures up by 2.6%. However, the bleaker outlook by the rating agency is disputing the positive data and has traders worried that any recovery may not be that strong and may take the form of a u-shape rather than the preferred v-shape. Supporting a bearish bias was total business investment falling by 5.5% in the first quarter. Standard & Poor's credit analyst David Beers said in a statement that "We have revised the outlook on the UK to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100 percent of GDP and remain near that level in the medium term." Markets are already concerned about the tax burden on consumer s going forward and if the government looks to extract more from Britons to offset their shortfall then the outlook for domestic growth will become dimmer and push out expectations for a recovery for the economy. Dollar fell against Japanese Yen and was supported at 94.27 as the country's Services Sector declined Most In 12 Years.

Evening Report-May 20.

The Indian rupee trimmed its early fall and rose as a large corporate and exporters sold dollars however further sharp gains were capped due to the drop in domestic shares.U.S. Dollar continued to lose ground to most of the majors except the Yen as risk appetite rose through European trading. A better than expected Japanese GDP reading spurred hope of a global recovery despite it showing the steepest contraction on record of 4%. A light fundamental calendar will leave dollar price action at the mercy of the broader themes as only MBA mortgage applications are due for release. Indeed the most significant event risk from the U.S. session will come in the form of Canadian CPI which is expected to fall to 0.6% from 1.2% in March. Also U.S. Treasury Secretary Timothy Geithner will testify at the Senate TARP hearings today and his remarks could spark volatility.The Euro also saw bullish sentiment surge at the beginning of the European session after falling to as low as 1.3584 despite bearish fundamental data. April German producer prices fell 2.7% which was the fastest pace in almost 22 years led by a 6.0% drop in electricity costs. The sharp fall oil prices are working their way through the economy as we saw a similar impact when their rose last year. Therefore, we could start to see inflation stabilize over the next few months which is why we have seen the ECB consistently dismiss deflation concerns. Meanwhile, industrial new orders in Italy fell for an eighth straight month as foreign demand fell by 33%, showing that weakness remains in the broader demand. We may see resistance today at yesterday’s high of 1.3671 which could be a sign that a retrace is possible. Pound bullish sentiment was bolstered by the BoE minutes which showed the central bank was unanimous in keeping rates on hold at 0.50% and expanding their quantitative easing efforts. The central bank felt that the risk of too little stimulus was greater that too much but saw "no pressing need" for a lager expansion of the purchase program than the £50 billion that was agreed upon. Meanwhile the CBI industrial trends reading saw a slight improvement to -56 from -57, but export orders fell to -446 from -34. BoE minutes confirmed what markets had already known from the quarterly inflation report which was that there was a high probability of CPI undershooting their 2% target. However, the minutes showed that the MPC was on "alert "for inflation resurging which paints a different picture than their forecast of prices remaining below 2% until 2012 in the quarterly report. Japanese Yen fell and was supported at 95.45 levels after finding resistance at 96.25 levels as Japan's economy shrink 4.0%, worse than the negatively revised 3.8% contraction that the Asian country saw in the final period of the previous year.Japan's economy in the first quarter contracted more than it did in the final three months of 2008, but still managed to perform stronger than economists had expected.

Euro and Pound reboundedwith usd weakness-May 20.

Euro found support at 1.3420 before rebounding on USD weakness to finish broadly supported. Comments from Weber that he doesn’t see positive growth until mid 2010 tempered enthusiasm for the single currency. Looking ahead, May German Zew Current Conditions forecast at -90 vs. -91.6 previously. Sterling was one of the biggest gainers on the improvement in risk appetite gaining against the EUR, USD and Yen to finish near month highs on all 3 pairs. May Right move House Prices increased 2.4%. GBP/JPY made large gains buoyed by the downgrade of Japans AAA debt. Looking ahead, April CPI forecast at 0.4% vs. 0.2%.

Technical Outlook:

EURO R1: 1.3705 S1: 1.3510
R2: 1.3750 S2: 1.3390
Chart pattern shows a range bound movement for the day. With the trading range of 1.3560 -1.3680 levels for the day. Currency is trading on the moving average break on either sides will confirm the trend and parabolic is supporting the bear note but Stochastic and momentum are seen down.

GBP R1: 1.5580 S1: 1. 5400
R2: 1.5620 S2: 1. 5380
Chart pattern is expected to give a slight downward correction and test the lower range of 1.5420 and then go for an bull run 1.5540 levels . Stochastic and momentum are seen flat . Currency is trading above the moving average and Parabolic is also supporting the bullish note.

Rupee dropped tracking the weaker stock market-May 20.

Rupee dropped as a stronger dollar overseas and expectations of a fall in domestic shares weighed, after it had jumped 4.3 per cent over three days. U.S. Dollar experienced another day of rapid change in market mood to finish significantly weaker than the start of Asia. The change was led by an incredible post election rally in India of over 17% before being limited by the exchange. The rally sent risk currencies surging and dented the demand for USD and JPY. Crude Oil was up $2.10 a barrel to close at 59.80.Looking ahead, April Housing starts forecast at 0.52M vs. 0.51M previously.

Technical Outlook:
USDINR is expected to give sideways to bullish note for the day. With Good support seen at 47.30 levels and key resistance is seen at 48.20.Currency is expected to trade in the trading range of 47.45-48.05 levels for the day. Stochastic is seen flat but has raised from the oversold areas and the market is trading below the moving average level.

Evening Report-May 19.

The Indian Rupee gave up gains of over 1 percent and closed at 47.77 as choppy shares failed to provide clarity on direction of fund flows, with likely central bank intervention also adding to the pressure.U.S. dollar has remained under pressure as the demand for risky assets carried over from the U.S. session yesterday into Asian and European markets. Additionally, JP Morgan Chase Co, Morgan Stanley, and Goldman Sachs are rumored to have asked permission to pay back over $45 of TARP funds. This should help restore confidence to the banking system and has U.S. futures in positive territory. Therefore, if there is a strong housing starts report today, equities could extend yesterday’s rally which could signal more dollar weakness. New construction is forecasted to rise to 523,000 from 510,000 which would add to the improving picture for the housing sector and the economy. The Euro also saw steady gains through overnight trading reaching as high as 1.3657 after the German ZEW survey crossed the wires at a three year high of 31.1. However, the bullish response was limited as the sentiment gauge also showed that existing conditions are worsening with the reading falling to -92.8 from -91.6. Additionally, Euro-zone construction with a print of -1.0% added to the dismal economic picture. It was the consecutive drop in activity for the region and a sign that the recession may not have bottomed leaving more work for the ECB. The pound shot higher at the beginning of the European session as bullish equity markets helped provide support for the currency. Surprisingly sterling temporarily extended its gains post a softer than expected consumer price report which showed inflation easing to 2.3% from 2.9% on an annualized basis in April. The depreciation in prices was more than the 2.4% that was expected by economists and the lowest in 15 months. April saw fuel & light costs fall by 2.8% followed by a 0.7% drop in home values. Housing prices have been the biggest drag on the index as they have fallen by 12.1% on an annualized basis. A 5.2% fall in clothing costs demonstrates the impact the recession has had on consumer consumption, but the component has improved over the past five months which could be a sign that demand is building. The MPC minutes due out tomorrow may also have the steam taken from them after the quarterly inflation report provided the justification for the central bank to add to its quantitative easing measures by another £50 billion. An expected 0.5% increase at the end of the week in retail sales may help build on the cable’s gains as it would add the signs that the recession is slowing. Japanese Yen fell as rising confidence in the banking industry sapped demand for the currencies after three financial institutions applied to refund government-bailout cash. Machine tool orders were unrevised at -80.4%.

Yen Weakens Versus Higher-Yielding Currencies as Stocks Advance -May 19

Japanese Yen tested support under 95 Yen before the dramatic change of mood saw the Yen weaken so fast some commentators thought there was intervention happening. AUD/JPY surged to 73.50 from 70.50. USD/JPY broke above 96.20 to finish on a bullish footing. Looking ahead, March Industrial Output previously at 1.6%.With R1: 97.10 ,R2: 97.20 and S1:95.80,S2:95.60.Yen chart is expected to have a bullish correction for the day . With the trading range between 95.90-96.90 levels. Stochastic and momentum are seen trending up and RSI is also confirming the bull trend.

Euro and pound gained on USD weakness-May 19.

Euro found support at 1.3420 before rebounding on USD weakness to finish broadly supported. Comments from Weber that he doesn’t see positive growth until mid 2010 tempered enthusiasm for the single currency. Looking ahead, May German Zew Current Conditions forecast at -90 vs. -91.6 previously. Sterling was one of the biggest gainers on the improvement in risk appetite gaining against the EUR, USD and Yen to finish near month highs on all 3 pairs. May Right move House Prices increased 2.4%. GBP/JPY made large gains buoyed by the downgrade of Japans AAA debt. . Looking ahead, April CPI forecast at 0.4% vs. 0.2%.

Technical Outlook:

EURO R1: 1.3640 S1: 1.3440
R2: 1.3650 S2: 1.3420
Chart pattern shows a sideways movement for the day. With the trading range of 1.3460 -1.3630 levels for the day. Currency is trading on the moving average and parabolic is supporting the bear note but Stochastic and momentum are seen trending up.

GBP R1: 1.5410 S1: 1. 5230
R2: 1.5430 S2: 1. 5220
Chart pattern is expected to give a slight downward correction for the day. With the trading range of 1.5240 -1.5400 levels for the day. Stochastic and momentum are seen trending down . But Currency is trading above the moving average and RSI is seen flat .

Rupee strengthened on inflow concerns-May 19.

Rupee strengthened extending gains for a third straight day, on expectations of a surge in domestic equities after the ruling coalition won the national elections. U.S. Dollar experienced another day of rapid change in market mood to finish significantly weaker than the start of Asia. The change was led by an incredible post election rally in India of over 17% before being limited by the exchange. The rally sent risk currencies surging and dented the demand for USD and JPY. Looking ahead, April Housing starts forecast at 0.52M vs. 0.51M previously.

Technical Outlook:

USDINR is expected to give bearish consolidation. With Good support seen at 49.20 levels and key resistance is seen at 49.90 .Currency is expected to trade in the trading range of 47.25-47.88 levels for the day. Stochastic is trending up from the overbought levels and the chart pattern shows a doji formation giving reversal signal. Caution required as the market is trading below the moving average level.

Evening Report-May 15.

The Indian Rupee pared gains as uncertainty about the outcome of general elections due on Saturday continued to weigh, with traders also keenly tracking the domestic sharemarket moves.U.S. dollar has held firm during overnight trading despite Asian and European equity markets trading in positive territory. Although, there is still an underlying concern that a global recovery will be prolonged which was supported by the dour EZ GDP figures. A slew of fundamental data for the U.S. will cross the wires today including the consumer price report. Inflation is expected to have remained flat during April but the more closely watched yearly number is forecasted to fall to -0.6% keeping deflation concerns alive. Meanwhile, industrial production and Empire manufacturing are also forecasted to remain in negative territory but show improvement from the month prior. Falling prices and declining activity in the U.S. will only add to current growth concerns and could fuel risk aversion and lend dollar support. However, the University of Michigan consumer sentiment reading is forecasted to improve for a third consecutive month to 67.0 from 65.1 which could temper pessimism as it may signal a return of consumer spending and domestic growth. Euro fell to as low as 1.3550 as the regions growth figures started to cross the wires starting with German GDP contracting by 3.8% which was the most in four decades. This lead to the aggregate GDP figures for the Euro-zone falling by a record 2.5% as declining global and domestic demand caused companies to cut production and layoff workers. Meanwhile, inflation held steady for the economic union at 0.6% while the core reading rose to 1.8% from 1.6% as we saw a pick up in recreation and travel costs. The central bank has long been considered to be behind the curve which fostered the pessimistic outlook for growth in the region.pound has seen light volume with an empty economic calendar and focus on the Euro-zone and U.S today. However, we have seen it come under pressure falling below 1.5150 as the currency lost its favor following the dour outlook from the BoE in their quarterly inflation report. Sterling has closely tracked equity markets and if we see weakness in the U.S. session today then the downside risk will increase. US dollar plunges to low against Japanese yen.Core machinery orders in Japan were down 1.3 percent to 727.9 billion yen compared to the previous month, significantly better than forecasts for a 4.6 percent .Meanwhile, the Bank of Japan said the price of corporate goods in Japan fell 3.8 percent on year in April .

Euro and pound received support retained bullish mood-May 15.

Euro bounced well off lows in Europe to finish in a bullish mood. Support close to 1.3500 discouraged attempts lower and strong stocks sent the pair higher once again. A host of comments from ECB members overnight failed to move the market. Looking ahead for Q1 GDP forecast at -2% vs. -1.6% previously. Sterling moved around a lot before finding solid support below 1.5100 and rallying to mid 1.52’s. EUR/GBP remained in the tight range developing just below 0.9000. GBP/JPY buying lifted the pair into the US session.

Technical Outlook:

EURO R1: 1.3690 S1: 1.3540
R2: 1.3720 S2: 1.3520
Chart pattern shows a narrow trade for the day. With the trading range of 1.3560 -1.3680 levels for the day. Currency is trading above moving average and took resistance at the upper bollingers. Stochastic and momentum are also seen trending up.

GBP R1: 1.5320 S1: 1. 5090
R2: 1.5340 S2: 1. 5070
Chart pattern hints towards sideways movement for the day. With the trading range of 1.5100 -1.5310 levels for the day. Currency is trading above the moving average and RSI is seen flat. But Stochastic and momentum are seen trending down .

Rupee rose on expectations of inflows.-May 15.

Indian Rupee rose against the US currency in early trade on expectations of capital inflows by foreign funds. U.S. Dollar returned to weakening as the heavy gains the day before inspired fresh selling. US data was weak but stock managed to also finish marginally higher. Weekly jobless claims at 637k vs. 610k Forecast. Looking ahead, April CPI at 0.1% vs. 0.2% previously.

Technical Outlook:

USDINR is expected to give bearish correction. With Good support seen at 40.30 levels and key resistance is seen at 49.95 .Currency is expected to trade in the trading range of 49.40-49.90 levels for the day. Stochastic is trending down and the currency is expected to give a correction till 49.30 levels but caution required as market in oversold areas.

Yen to Strengthen as Greenback Loses Safety Allure-May 14.

Japanese Yen strengthened considerably as the crosses joined the USD/JPY is sliding aggressively. AUD/JPY was a leader on the way up and also led on the way down. Looking ahead for March Machine Orders are forecast at -4.5% vs. 1.4% previously.With R1: 96.30 ,R2: 96.40 andS2:94.80,S1:95.00.Yen chart is expected to have a bear note for the day . With the trading range between 95.10-96.20 levels. Stochastic and momentum are seen trending down and RSI is also confirming the bear trend. Caution required as chart pattern shows a small reversal sign.

Euro and sterling fell as Global Optimism Wanes, Asian Stocks Decline -May 14.

Euro fell overnight although not as sharply as most currencies. During the Asian session the EUR/USD traded near 6 week highs above 1.3700. The main falls were seen in EUR/JPY which broke through 130 Yen. March Industrial Production was at -2% vs. -1% forecast.Sterling fell back after the Bank of England inflation report showed that CPI should stay below 2% for the next 3 years. This slow recovery view is at odds with the green shoots commentary form other Central Banks around the world. EUR/GBP traded above 0.9000 before once again slipping form this key level.

Technical Outlook:

EURO R1: 1.3650 S1: 1.3470
R2: 1.3660 S2: 1.3450
Chart pattern hints towards bearish movement for the day. With the trading range of 1.3480 -1.3630 levels for the day. Currency is trading above moving average and took resistance at the upper bollingers. Stochastic and momentum are also seen trending down .

GBP R1: 1.5240 S1: 1. 4990
R2: 1.5260 S2: 1. 4970
Chart pattern hints towards bearish movement for the day. With the trading range of 1.5010 -1.5230 levels for the day. Currency is trading below moving average and RSI is also trending down. Stochastic and momentum are also seen trending down .

Indian rupee weakened after exit polls-May 14.

The Indian rupee weakened to its lowest in more than two weeks after exit polls showed the ruling Congress coalition was ahead in general elections but would fall short of a parliamentary majority. U.S. Dollar enjoyed a major reversal of direction with sentiment turning overnight. Weak US Retail Sales of -0.4% in April sent US stocks skidding over 2% down. Also dampening sentiment was the commentary from BOE’s King that the risk was skewed to a protracted economic downturn. Looking ahead for Weekly Jobless Claims are forecast at 610k vs. 601k previously.

Technical Outlook:

USDINR is expected to give bearish correction after testing the resistance level of 50.10 levels .With good support seen at 49.65 .Currency is expected to trade in the trading range of 49.70-50.05 levels for the day. Stochastic is trending up but is expected to give a correction as it is in the overbought levels.

Rupee edged lower after a steady start as traders anticipated a drop in domestic shares, which could prompt a sell-off by foreign investors, but a weaker dollar overseas capped the fall. U.S. Dollar felt more pressure as traders tested the dollars downside once again. A small rise in US stocks and better than expected US trade data prompted more risk taking. March Trade Balance at -27.5Bn vs. -29Bn forecast. Looking ahead, April Retail Sales forecast at 0.0% vs. -1.2% previously.
Technical Outlook:

USDINR is expected to be on a sideways move for the day and with the trading range of 49.10-49.50 levels for the day. With good support seen at 49.02 levels and key resistance is seen at 49.58 levels. Stochastic is seen flat but the currency is trading below the moving averages.

Euro and Pound soared against dollar-May 11.

Euro held to the 1.3400 area before the US data prompted a rally that did not stop until above 1.3600. The catch-up of the Euro post ECB allowed most of the crosses to gain led by the EUR/GBP and EUR/JPY. March German Industrial Production remained flat vs. -1.3% expected. Sterling support at 1.5000 was tested with the market still worried about the expansion of the BOE’s Quantitative Easing program. The Key support held and the subsequent rally helped the Pound close above 1.5200 at its highest level since January.

Technical Outlook:

EURO R1: 1.3740 S1: 1.3480
R2: 1.3760 S2: 1.3460
Chart pattern hints towards bullish movement for the day. With the trading range of 1.3510 -1.3720 levels for the day. Stochastic and momentum are seen trending up and currency is also trading above the fast moving average and relative market strength is supporting bull note.

GBP R1: 1.5290 S1: 1. 5120
R2: 1.5320 S2: 1. 5110
Chart pattern shows the possibility of small downside correction for the day. Trading range is expected between 1.5150 -1. 5280 levels for the day. Relative market strength is down and momentum is also supporting it but caution required as the Currency is trading above the moving averages .

Rupee strengthened on capital inflows-May 11.

Indian rupee strengthened on expectations of capital inflows by foreign funds amid weakening of dollar against other major currencies. U.S. Dollar finished the week at multi-month lows against the Euro as better than expected US Job Data allowed risk appetite to jump another notch higher. April Non-Farm Payrolls were down -539K vs. -590K forecast. The Unemployment Rate leaped to 8.9% vs. 8.5% previously. Crude Oil was up $1.92 ending the New York session at $58.63 per barrel.

Technical Outlook:

USDINR is expected to be on a bear note for the day and trade in the range of 49.02-49.21 levels for the day. With good support seen at 48.95 levels and key resistance is seen at 49.28 levels. Stochastic is trending down giving bearish crossovers but caution required as market is trading near zero level. Currency is expected to test the upper range before giving downward correction

Evening Report-May 07

The Rupee closed at 49.23 per dollar tracking firm domestic shares, which raised hopes for fresh capital inflows and bouyed by rise in other Asian units. The dollar was initially trading higher against the euro and pound with the pending BoE and ECB rate decision, has since come under pressure as higher equity markets in Asia and Europe continue to fuel risk appetite. However that sentiment could change if the U.S. government’s bank's stress test result reveal that more banks need to raise capital than the early rumors have dictated which could reverse recent optimism and lead to dollar support. It has been leaked that Goldman Sachs, Wells Fargo and JP Morgan are adequately capitalized while Bank of America and Citigroup will most likely raise capital through issuing common shares Although, price action will be dictated by the European policy makers and the bank stress test results, today’s initial jobless claims release also has the potential to be market moving. The employment figures come on the heels of yesterday’s ADP report which showed that the labor picture is improving. Markets will be looking to see if the number of claims supports the brighter outlook ahead of tomorrow’s NFP report. Euro has started to find support after falling to as low as 1.3251 against the dollar as speculation has started to increase that the ECB may not cut rates which was supported by March German factory orders unexpectedly gaining 3.3%. It was the first positive reading in activity for the regions largest economy in seven months which helped push the euro/dollar to as high as 1.344. The most encouraging component was that an increase in foreign demand was led by a 6.1% increase from Euro-zone members adding to signs that the recession may be slowing.The ECB is expected to cut rates by 25 bps to a record low 1.00% today, which the committee may set as a floor for monetary policy as several members have expressed reluctance to go below. If this is the case we could see the euro find support if the action isn’t coordinated with quantitative easing measures. The central bank has been reluctant to follow the BoE and Fed in purchasing government debt as the strategy is more difficult to execute with an economy consisting of 16 countries and their various debt instruments. Recent improvements in the German IFO and Euro-zone PMI reading could lead the central bank to keep rates on hold as they chose to maintain their measured approach. Considering the current division amongst them, there may not be the necessary votes to make a policy change.Pound has seen choppy price action ahead of today’s BoE rate decision, where the central bank is expected to keep their benchmark rate at 0.50%. The MPC doesn’t have much room to maneuver and will most likely keep rate sat their current record low for the time being. However, the central bank may add to their quantitative easing efforts which have started to impact credit market as we have seen Libor rates fell below 1% for the first time. At the last policy meeting Governor King stated that it would take at least two months for the central bank to finish their initial government bind purchasing program which could make today’s rate decision a non-event. The committee will most likely not provide a statement if they keep rate sin hold and refrain from initiating more non-traditional efforts.

Evening Report-May 06.

Indian rupee traded weaker and closed at 49.59 weighed down by an over-1 percent drop in domestic shares but the weakness in the dollar index helped it trim some of its earlier losses.The upcoming ADP employment report could spark considerable volatility today for Dollar as the indicator has become an accurate predictor of the more closely watched Non-farm payroll report. The economy is expected to have lost 645,000 private jobs which is considerably less than the 742,000 the month prior. A better than expected print would add to the building optimism for the U.S. economy and could fuel risk appetite and weigh on the dollar. The greenback has come under pressure during European trading after posting gains throughout the Asian session as markets have started to look past tomorrow’s bank stress test results.The Euro dropped to as low as 1.3250 during Asian trading on a story that Bank of America needed to raise $34 million but started to find support ahead of the March Euro Zone retail sales release. Consumption in the 16 member economic union fell by a record 4.2% from a year ago against expectations for a 2.6% decline. Consumers cut their food purchases by 5.2% as they continue to retrench with the recession deepening. However, the month of March’s 0.6% drop isn’t that much of a surprise given that labor conditions continue to deteriorate especially in Germany the regions largest economy. The weak retail sales conflicts with the improving sentiment readings that we have been seeing from the region and will make the ECB’s job more difficult. It is the central bank’s preference to wait and see if their previous efforts are impacting growth allowing them to refrain from slashing their benchmark to a record low %1.00. However, inflation and growth risks remain to the downside and with the U.S. and U.K. recessions showing stronger signs of slowing, the pressure is on the committee to catch up in their policy actions. The looming rate decision has help limit Euro gains as the currency has found strength on the improving outlook for the global economy. The pound fell to 1.500 during Asian trading but building support was reinforced by a stronger than expected PMI service reading sending it back above 1.5120 against the dollar. The service sector gauge rose to 48.7 from 45.5 in March on the back of increasing new business which jumped to 48.2 from 44.1. The sector still remains in contraction but is closing in on the 50 boom/bust level and beat expectations of 46.6 continuing the theme for U.K. fundamentals. However, not all the data has been positive as the Halifax house price reading showed the largest annual decline since 2002 of 17.7%. Additionally the growth prospects are already limited by the increasing tax burden for Britons. The BoE is expected to stand pat at tomorrow’s rate decision as they have exhausted their efforts to boost growth. The yen rose on concern that U.S. regulators will say Bank of America Corp. needs $34 billion in new capital, boosting demand for safety

Evening Report -May 05

Indian Rupee closed at 49.29 as exporters sold dollars on expectations the rupee was going to rise further in the coming sessions. U.S. dollar remains under pressure as growing optimism continues to fuel demand for riskier assets which led to the S&P 500 erasing all of its losses for the year during trading yesterday. However, we could see a retracement today if traders look to book profits which could create greenback support. Yet, the ISM non-manufacturing report is expected to show an improvement to 42.0 from 40.8 as an increase in consumer confidence could have sparked greater demand. An improvement in the service sector gauge would build upon the positive manufacturing reading and boost the outlook for future growth. An improvement in hiring could lower expectations for the amount of job losses in the economy for April which will be revealed in Friday’s Non-farm payroll report. The Euro traded heavy after reaching as high as 1.3441 as traders started to hedge their bets ahead of the Producer price report. The inflation gauge showed that factory gate prices fell by 3.1% on a yearly basis which was the biggest drop in 22 years. A 7.3% drop in energy costs led the way but the 1.7% decline in the other components demonstrates that prices are being cuts across the board. However the dismal inflation report failed to extend the single currency losses as it has started to regain its footing since the release trading higher from its intra day low of 1.3321.Indeed European companies have been forces to slash prices as they try and lure in consumers that remain reluctant to open their wallets as the region’s recession continues to deepen. Although the ECB has maintained that it isn’t concerned about deflation as they expect price pressures to return by the end of the year. The pound reached as high as 1.5115 as it was boosted by April’s PMI construction reading rising to 38.1 . The reading shattered prediction s of 31.9 which could be assign that loosening credit markets are beginning to fuel demand for new construction as businesses and consumers are beginning to gain access needed funds. Sterling continues to benefit from the broader increasing optimism and with China and the U.S. showing green shoots if the U.K. data continues to follow suit then we could see the currency continue to receive support. Japaneses Yen remained within the range of 98.60-99.20 levels for the day.

Gains inYen were tempered by RBA rate decision-May 05

Japanese Yen general USD weakness stopped the USD/JPY from gaining again today with the Key 100 level proving too ambitious. Crosses were very buoyant however with AUD/JPY remaining near year highs. The market is quieter than usual with Japan away on holidays.With R1: 99.40 , R2: 99.50 and S1:98.40, S2:98.30.chart pattern shows rectangle pattern and a very narrow trade. With the trading range between 98.50-99.20 levels. Stochastic and momentum are seen flat and the currency is also trading on a tight band. Break from the rectangle would only give a clearer direction.

Euro and Pound remained sidelined-May 05

Euro started to head higher in Asia with the release of Chinese PMI data which improved to above 50 in April. This good news for the worlds third largest economy helped set the tone for the rest of the trading day. March German Retail Sales dropped -1% vs. -0.1% forecast. Looking ahead, March PPI is forecast at -0.5% vs. -0.5% previously . Sterling was poised below 1.500 most of the day until surging US stocks encouraged the market to break above late in the US session. The BOE meet on Thursday although the market is expecting no change to the 0.5% rate. Any change in the scope of Quantitative easing could still be quite a market moving event. Looking ahead, April Consumer Confidence previously at 41.

Technical Outlook:

EURO R1: 1.3450 S1: 1.3270
R2: 1.3480 S2: 1.3250
Chart pattern hints towards the possibility of profit booking for the day. With the trading range of 1.3290 -1.3440 levels for the day. Currency is trading above the moving averages showing bullishness and parabolic but stochastic and momentum have turned from the overbought levels hinting towards the possibility of consolidation and currency is also trading near to upper bollingers.

GBP R1: 1.5090 S1: 1. 4900
R2: 1.5110 S2: 1. 4880
Chart pattern shows the possibility of small downside correction for the day. Trading range is expected between 1.4920-1.5080 levels for the day. RSI and stochastic are seen trending down but caution required as the Currency is trading above the moving averages and momentum is also confirming the bull note.

Rupee strengthened on FII inflows hopes-May 04.

Rupee strengthened in early deals helped by gains in other Asian currencies but traders are awaiting the domestic share market's open for cues on direction of fund flows. U.S. Dollar Dollar strength was short lived as Global Stock markets charged ahead. Most Currencies made solid gains against the USD with commodities also making substantial gains. Pending Home Sales rose 3.2% vs. 0% forecast. Crude Oil was up $1.27 ending the New York session at $54.55 per barrel. Looking ahead, April PMI Manufacturing Forecast at 42 vs. 40.8 previously.

Technical Outlook:

Rupee is expected to be on a sideways move and trade in the range of 49.50-49.85 levels for the day. With good support seen at 49.40 levels and key resistance is seen at 49.92 levels. Stochastic is trending down. caution required as market is trading in the oversold levels and currency is trading on the lower band levels .

Evening Report-May 04.

Indian rupee gave up some more of its early gains against the US dollar because of persistent demand for the greenback from importers. Banks also covered their short positions after dollar inched up against major currencies like the euro and the pound sterling.Gold related demand and dollar demand from oil companies also pulled the Indian unit off its highs.U.S. dollar has started to regain its footing on the weak European data which helped reverse earlier losses built on an increase in the Chinese PMI reading to 53.5 from 52.4. The improvement in manufacturing activity helped boost optimism for the global economy which could be picked up by U.S. markets and continue greenback losses. However, the U.S. fundamental calendar will present event risk in the form of U.S. pending home sales which are forecasted to remain flat after a 2.1% increase in February. The lack of improvement in the housing sector could give investors pause as there are expectations that we could see continued weakness in the sector as mounting job losses stretch Americans and increase the potential for more foreclosures. Speculation that GM will follow Chrysler into bankruptcy could be also weigh on investor sentiment and generate safe-have flows into the dollar.The Euro has traded heavy since reaching an intraday high if 1.3348 on the back of slumping German retail sales and an uninspiring improvement in the Euro-zone Sentix investor sentiment reading. Unemployment in Germany has risen to its highest level in over a year at 7.6% and the weak labor market weighed on consumer consumption which declined by 1.0% in March versus expectations of a 0.2% gain. Meanwhile, the Euro-zone Sentix investor confidence reading slightly improved to -34.3 from -35.3 but was significantly below estimates of -28.0. Traders have become more pessimistic about the current state of affairs which is offsetting the improving outlook for the future. On a positive note the final reading for the Euro- zone PMI reading was revised higher to 36.8 from 36.7, as it improved for a second month. Pound has come under considerable pressure falling below 1.4870 after reaching as high as 1.4982 despite Holiday trading in the U.K.. The weakness has come on the heels of the disappointing European data and the failure of the pair to break above the 1.500 price level could be a sign of more weakness to come. The BoE will also announce their rate decision on Thursday but unlike the ECB is forecasted to keep their benchmark rate at the record low of 0.50%. The central bank has already embarked on quantitative easing measures which have started to impact credit markets and is expected to start to have an impact on the economy in the coming months. Their purchase program of government debt is expected to take another month to complete and until then the MPC should stand pat and asses its impact. yen plummeted against its major counterparts as the Asian stock markets rose on optimism about emerging strength in the U.S. economy and easing fears about swine flu, which increased investors risk appetite.

Aussie dollar hits 7-mth peaks-May 04.

Australian Dollar traded back above 0.7300 as risk appetite pick up again. Strong Commodities and Economic data both added to buoyancy with the market now turning its attention to Tuesday’s RBA meeting.With R1: 0. 7400 ,R2: 0.7410 and S1:0.7230,S2: 0.7220.Chart pattern signals bullish trend for the day .Trading range is expected between 0.7240 - 0.7390 levels .Momentum and stochastic are seen trending up and Currency is also trading above the moving average level .

Yen Falls as Speculation Global Slump Easing Spurs Yield Demand -May 04.

Japanese Yen continued to weaken as the USD/JPY reclaimed the 99 level and most of the crosses led by GBP/JPY and AUD/JPY grinded higher. Optimism and weak Japanese data providing the motivation. With R1: 100.10,R2: 100.25 and S1:98.80, S2:98.70.Yen chart pattern indicates bullish move for the day . Trading range for the day is expected between 98.90 – 100.10 levels. Stochastic and momentum are seen trending up and currency is trading above the moving average level confirming the bull trend.

Euro and Pound managed small gains-May 04

Euro managed small gains against the USD into the weekend. EUR/JPY provided much needed support to keep the Euro close to 1.3300. Volumes were lower than usual as most of Europe was away for May Day Holidays. Looking ahead, March German Retail Sales forecast at -0.1% vs. -0.2%. Sterling used better than expected data to surged back towards 1.5000 and helped the EUR/GBP back towards 0.8900. UK PMI Manufacturing jumped to 42.9 vs. 39.5 previously. Looking ahead, April Halifax House Prices forecast at -1% vs. -1.9% previously.

Technical Outlook:

EURO R1: 1.3420 S1: 1.3220
R2: 1.3430 S2: 1.3200
Chart pattern hints towards a bullish trend for the day. With the trading range of 1.3410 -1.3230 levels for the day. Currency is trading above the moving averages showing bullishness and parabolic and stochastic are also supporting it.

GBP R1: 1.5020 S1: 1. 4780
R2: 1.5040 S2: 1. 4750
Chart pattern shows bullish note for the day. Trading range is expected between 1.4790-1.5010 levels for the day. RSI and stochastic are seen trending up .Currency is trading above the moving averages and momentum is also confirming the bull note.

Indian rupee rises on regional cues-May 04.

Rupee rose as gains in regional stock markets may attract more capital inflows a key driver for the local unit.U.S. Dollar was once again at the mercy of the equity markets which managed to make small gains into the weekend and pressured the Dollar lower. ISM Manufacturing managed to jump to 40.1 in April vs. 36.3 previously. US Factory Orders fell -0.95 in March. Crude Oil was up $2.08 ending the New York session at $53.20 per barrel.Looking ahead, Pending Home Sales March forecast at 0% vs. 2.1% previously.

Technical Outlook:

Rupee opened at a lower note with a gap and is expected to trade in the range of 49.48-49.80 levels for the day. With good support seen at 49.32 levels and key resistance is seen at 49.88 levels. Stochastic is trending down. caution required as market is trading in the oversold levels and currency is trading on the lower band levels .