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.