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.