Indian rupee extended downtrend against the dollar and closed at 48.62 levels during deals in India as a drop in local stocks weakened the currency. Indian stocks ended near day's lows today as traders booked profits across the board ahead of June series of F&O expiry. Negative European markets also kept the markets under pressure .An empty U.S. calendar could see the dollar take its cue from equity markets today as risk sentiment continues to be a driving force of price action. The World Bank cutting its growth forecast has markets lower in Europe and U.S. futures pointing at a lower open. The global agency cut its GDP forecast to -2.9% from -1.7% stating that a recovery will be subdued compared to a normal scenario. Therefore, we may see the greenback continue to find support heading into the U.S. session and going forward as the outlook for a robust recovery dims. Euro has started to consolidate earlier losses after the German IFO report showed an improvement in business sentiment for the third straight month. The German IFO business climate reading in June rose for a third month to 85.9 from 84.3 signaling that the economy may have bottomed. Economists forecasted an improvement to 85.0, but a jump in expectations to 89.5 from 85.9 help offset a slight decline in the current assessment to 82.4 from 82.5. The single currency fell sharply before the release on comments from ECB member Nowotny that the central bank would most likely leave interest rates unchanged until 2010 erasing speculation of a rate hike. The central bank’s mandate of price stability has led to many traders predicting that they would be the first to start tightening once growth signs emerged. The higher interest rate expectations have provided support for the Euro and with them removed; we could see continued weakness from the single currency. However, an improvement in business sentiment and continuing signs of a recovery could continue to remain a supportive factor and limit the downside risks. Pound has seen whipsaw price action after a 0.4% drop in home prices according to Rightmove LLC led to initial weakness. It was the first drop in five months which may be a sign that demand is waning as bargain hunting ends. The current triangle formation appears to be completing which could lead to a breakout, and with the dimming outlook for a global recovery downside risks may be the greatest .Japanese Yen strengthens as Pessimism about the economy among Japan's big manufacturers lessened notably in the second quarter. The business confidence index for large manufacturing companies rose to minus 13.2 in the second quarter from a record low of minus 66 in the first quarter. Gauge for non-manufacturers' confidence stood at minus 27.8 up from previous quarter's minus 42.6. Hence the index for all industrial confidence improved to minus 22.4 from minus 51.3.
Monday, June 22, 2009
Evening Report-Jun 22
Indian rupee extended downtrend against the dollar and closed at 48.62 levels during deals in India as a drop in local stocks weakened the currency. Indian stocks ended near day's lows today as traders booked profits across the board ahead of June series of F&O expiry. Negative European markets also kept the markets under pressure .An empty U.S. calendar could see the dollar take its cue from equity markets today as risk sentiment continues to be a driving force of price action. The World Bank cutting its growth forecast has markets lower in Europe and U.S. futures pointing at a lower open. The global agency cut its GDP forecast to -2.9% from -1.7% stating that a recovery will be subdued compared to a normal scenario. Therefore, we may see the greenback continue to find support heading into the U.S. session and going forward as the outlook for a robust recovery dims. Euro has started to consolidate earlier losses after the German IFO report showed an improvement in business sentiment for the third straight month. The German IFO business climate reading in June rose for a third month to 85.9 from 84.3 signaling that the economy may have bottomed. Economists forecasted an improvement to 85.0, but a jump in expectations to 89.5 from 85.9 help offset a slight decline in the current assessment to 82.4 from 82.5. The single currency fell sharply before the release on comments from ECB member Nowotny that the central bank would most likely leave interest rates unchanged until 2010 erasing speculation of a rate hike. The central bank’s mandate of price stability has led to many traders predicting that they would be the first to start tightening once growth signs emerged. The higher interest rate expectations have provided support for the Euro and with them removed; we could see continued weakness from the single currency. However, an improvement in business sentiment and continuing signs of a recovery could continue to remain a supportive factor and limit the downside risks. Pound has seen whipsaw price action after a 0.4% drop in home prices according to Rightmove LLC led to initial weakness. It was the first drop in five months which may be a sign that demand is waning as bargain hunting ends. The current triangle formation appears to be completing which could lead to a breakout, and with the dimming outlook for a global recovery downside risks may be the greatest .Japanese Yen strengthens as Pessimism about the economy among Japan's big manufacturers lessened notably in the second quarter. The business confidence index for large manufacturing companies rose to minus 13.2 in the second quarter from a record low of minus 66 in the first quarter. Gauge for non-manufacturers' confidence stood at minus 27.8 up from previous quarter's minus 42.6. Hence the index for all industrial confidence improved to minus 22.4 from minus 51.3.
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