Evening Report-Jun 04.

Indian unit closed at 47.19 and was seen on a weakening note as Indian state-run banks were seen buying dollars around 47.10 rupees as the Indian currency tried to edge back towards seven-month peaks reached in the previous session.Mixed clues from stock market also avoided volatile trade.The U.S. dollar weaken against its European counterparts and may continue to face increased selling pressures ahead of the BoE, ECB, and BoC rate decisions as the policymakers attempt to put a floor on their respective benchmark interest rate, and a rise in market sentiment is likely to weigh on the exchange rates as market participants raise their appetite for higher risk/reward investments. At the same time, a report by the Labor Department is anticipated to show a fall in initial jobless claims, while continuing claims for unemployment benefits are expected to rise to a record-high of 6855K in the week ending May 23. As investors eagerly await the Non-Farm payrolls report scheduled for Friday, a dismal jobless claims report could spur demands for the greenback as the reserve currency continues to benefit from safe-haven flows. Euro bounced back to reach an intraday high of 1.4243 against the U.S. dollar during the overnight session, and the single-currency may continue to push higher into the U.S. open as the European Central Bank attempts to put a floor on the benchmark interest rate. At the same time, the central bank is widely expected to unveil its outline for the EUR 60B covered bond purchase in full detail however, as the Governing Council fails to meet on common ground, a lack of decisive action could weigh on the exchange rate as the outlook for growth and inflation remains bleak.The economic docket for the Euro-Zone showed retail spending increased 0.2% in April, which was in-line with expectations, while the annual rate of consumption slipped 2.3% from the previous year amid expectations for a 2.9% drop. Nevertheless, The ECB rate decision highlights the major event risk for the euro over the next 24 hours of trading, and the Q&A session with President Trichet is likely to move the markets as investors continue to weigh the outlook for future policy. The central bank head is likely to hold a dovish tone as he expects inflation to fall below the 2% target later this year but at the same time, the CPI estimate fell to a record-low of 0.0% in May, and mounting risks for deflation could lead policymakers to ease policy further in an effort to stimulate the ailing economy. British pound pared losses during the overnight, and bounced back to reach an intraday high of 1.6435 during the European trade as U.K. house prices unexpectedly increased in May. The Halifax house price index increased 2.6% from April, which beat expectations for a 1.0% drop, while prices fell at an annual rate of 16.3% in the three-months through May. Meanwhile, the Bank of England is widely expected to hold the benchmark interest rate steady at the record-low of 0.50%, and market participants speculate that the central bank will utilize the remaining GBP 25B of the GBP 150B allotted by the Chancellor of the Exchequer in an effort to stem the downside risks for growth and inflation. However the MPC may adopt a wait-and-see approach this month as policymakers anticipate an economic recovery this year, and long-term expectations for higher interest rates may continue to drive the British pound higher over the near-term as the BoE puts a floor on the interest rate.Yen plunged to a 3-day low of 96.70 against the US dollar as Japanese Q1 Capex Plummets On Easing Profits .Japanese companies reduced their spending on plant and equipments in the first three months of 2009 as plunging profits forced corporates to cut investment.