Evening Report-Jun 29.

The Indian rupee erased gains after rising to its highest in more than a week and closed at 49. 10 on customary month-end dollar demand from refiners.The dollar has remained supportive as China’s central bank chief Zhou Xiaochuan said his country’s foreign exchange reserve policy is "quite stable" , which was a reversal from previous calls for a super sovereign currency. A relatively empty calendar could leave price action at the mercy of the broader themes which could include a pull back in risk appetite. A shortened holiday week could see light volume which may lead to choppy price action especially ahead of the unusual Thursday employment report. The economy is expected to have lost another 350K jobs which may disappoint market participants that were expecting continued improvement. The Euro has started to see choppy price action after initial weakness on broad based dollar strength. An improvement in Euro-zone economic confidence to 73.3 from 69.3-the highest since November- led to a brief bout in bullish sentiment. There was a broad based increase in optimism in the region with consumer confidence improving as well to -25 from -30. The improving sentiment is starting to translate into greater domestic demand, evidenced by the increase in June’s Bloomberg retail indicator to 47.5 from 47.1. There have been signs that the European economy is improving but will it be enough to keep the ECB on hold at this week’s policy meeting. The OECD last week called for the central bank to cut interest rates immediately but that was in stark contrast from the rhetoric from policy makers. Several committee members including President Trichet stated that current interest rate were appropriate signaling that the current %1.00 could be the end of their easing policy.The Pound has seen choppy price action starting with an earlier spike that was driven by a pick up in risk appetite. Higher European equity markets and U.S. futures paring earlier loses helped spark sterling bullish sentiment, before a less than impressive lending report curbed enthusiasm. Mortgage approvals rising to 43.4K from 43.2K in May, was missed the 46.0K forecasted which raised concerns. A housing recovery remains a key to an economic recovery. Indeed, the Hometrack housing survey showed that prices remained flat in June which reinforced an earlier report from Rightmove which showed the first decline in five months. The stabilization of the housing sector is a key to a U.K. economic recovery and if we see it begin to stall as credit conditions remain challenging then it could start to weigh on the pound. Japanese Yen remained Range Bound as the Industrial production in Japan jumped 5.9 percent compared to the previous month but figures were lower than expectations for a 6.9 percent increase.Retail sales were flat, in line with forecasts after the 0.6 percent increase in the previous month.