Evening Report-jul 24

Indian Rupee ends at 48.22 levels edging up on capital flows into domestic shares after upbeat earnings boosted investor appetite for equities across regions. Gains were capped by dollar demand from oil refiners and importers .The Dollar continues to be pressured as risk appetite has soared with U.S. equity markets erasing all of their losses for the year and breaking above significant resistance levels. However, we are starting to see some dollar support as the dismal U.K. GDP figures has taken the wind out of bull’s sails for the moment. We won’t have a robust earnings calendar as we have had the past few days but Microsoft’s after the bell reported a 29% drop in profit which could weigh on sentiment today. Strong growth in South Korea and more signs that the Euro-Zone economy is rebounding had erased concerns over the tech giant’s earnings overnight but the weak U.K. figures could reignite concerns. Nevertheless, U.S. futures remain positive and continued strength today could lead to currency’s finally breaking from their current ranges. However, we saw yesterday that the correlation between currencies and equities start to break down which should be watched today. Meanwhile the University of Michigan consumer confidence final reading for July is due and expected to be revised higher to 65.0 from 64.6 but still lower from June’s 70.8. A decline in optimism could limit expectations for domestic growth and add support for the greenback. Euro has steadily climbed throughout overnight trading as improvements in the German IFO and Euro-Zone PMI readings added to the prevailing bullish sentiment. German business sentiment rose to 87.3 from 85.9, which was the highest since October as both the current sentiment and future outlook saw improvements. Meanwhile, the PMI composite rose to 46.8 versus expectations of 45.3 as both the service and manufacturing sectors showed a slower rate of contraction. The sectors are on the verge of growth as record low interest rates and government stimulus is helping stabilize the economy. ECB member said Concerning prospects for 2010, after a period of stabilisation, a gradual rebound is anticipated in the Euro zone. This could be a sign that the central bank is done with their efforts to revive the economy and we could see them officially cap their covered bond purchase program at the current 60 bln euros which could start to raise interest rate expectations and lend further support for the single currency. Pound fell sharply after the preliminary second quarter GDP figures showed the economy contracted by 0.8% which was more than double the median estimate of 0.3%. Sterling reached as high as 1.6544 before the release on prevailing risk appetite, but a record 5.6% drop in the annual reading for GDP saw the GBP/USD drop over a 100 pips but is starting to regain its footing. We also saw the index of services fall by 1.0% as the sector that accounts for more than 70% of GDP continues to show weakness. The depth of the contraction for the U.K. economy will make it formidable for the economy to return to growth and although we are seeing signs of stabilization there may be more work ahead for the BoE to ensure a recovery. Therefore markets begin to price in additional quantitative easing efforts from the central bank which they could announce at their August policy meeting. Taking a look at the GDP breakdown every component declined over the three month period led by a 2.1% drop in transport & communication. However manufacturing saw its pace of decline slow to 0.3% from over 5.0% the past two quarters. . Dollar has appreciated against Yen to reach the highest prices in the last three weeks, taking back half of the drop from early June Buoyed by strong earnings reports and home sales data from the U.S., the impressive surge on Wall Street overnight and growing optimism about the global economy.

Euro and pound remained range bound-Jul 24.

Euro made new month highs at the height of the Equity rally before slumping hard into the close to make a new daily low. EU Current Account at -13Bn vs. -9.2Bn previous. The outlook is mixed with the topside failure leading some analyst to call for a test of 1.4000 supports before attempting to test the year highs of 1.4338 again. Looking ahead, July German IFO forecast at 86.5 vs. 85.9 previously. Also Released EU PMI Services are forecast at 45.1 vs. 44.7 previously. Japanese Yen was sold aggressively for most of the day as the USD gained the upper hand with the break above 9000 on the DOW and the break above 95 Yen. The pair is looking very strong after the failure on the downside at 93.20 and the improving investor sentiment likely to help crosses rally. Sterling broke above 1.6500 and was volatile above as USD strength and lingering UK fears kept price action mixed. GBP/JPY supported in Asia and EUR/GBP selling during the rest of the day. UK June Retail Sales at 1.2% were much stronger than expectations of 0.4%. Looking ahead, Preliminary GDP Q2 forecast at -0.3% vs. -2.4%

Technical Outlook:

EURO bulls were capped at 1.4291 levels .Currency is expected to have a trading range of 1.4050-1.4260 levels .Good support is seen at 1.4020 levels. Stochastic and momentum indicators are pointing up and relative market strength is also bullish indicating small upward correction before a fall. Key resistance for the currency is seen at 1.4300 levels.

GBP charts are giving sideways outlook. Currency has its immediate resistance at 1.6550 levels and break of which will push it to 1.6600 levels. Good support is seen at 1.6430 if that level is broken then a test of 1.6375 is expected .Momentum and stochastic indicators are pointing up on daily charts showing the possibility of upper band test.

Rupee rose on expectation of inflows-Jul 24.

Rupee rose as gains in regional stock markets raised expectations for more capital flows into the domestic market, but import payments by oil refiners will be watched. U.S. Dollar strengthened after being under pressure for most of the day as some poor results after hours from Microsoft led to a sharp pullback in the majors. USD/JPY tracked stocks higher and was able to retain the strength. June Existing Home Sales were better than expectations at 4.89M vs. 4.82m forecast. Weekly Jobless claims were at 554K vs. 522k previously. Looking ahead, UoM June Consumer Confidence forecast at 65.1 vs. 64.6 initial.

Technical Outlook:

USDINR charts are locked in 48.20-48.56 range Stochastic is trending down and has given bearish crossovers is expected to test the support levels only break below that level would trigger bearishness else currency is expected to pick up small upward correction and rally to test 48.56 levels.. Immediate resistance is seen at 48.62. Currency is also seen trading on the moving average only break on either side would confirm the trend.

Evening Report-Jul 23.

The Rupee moved in a narrow band against the dollar as dollar supply matched demand. Banks sold dollars noting local shares ended up over 2%.Market has been range-bound today. It looks like there has been government-related payment demand in the market that gave rise to dollar demand despite the rise in shares. The Dollar has come under some pressure overnight as we have seen an increase in demand for risky assets. Earnings season for the most part has been positive outside of Morgan Stanley’s loss yesterday which has limited downside risks. Today we will have several; blue chip names report including 3M, AT&T and McDonald’s which could impact sentiment. Regardless jobs and housing data today will generate significant focus as they still remain as the critical elements in a recovery. Initial jobless claims are expected to increase to 557,000 from 552,000 which could dampen optimism as unemployment is expected to continue to rise until the end of the year. Meanwhile existing home sales could add to the signs that the housing market is stabilizing with an expected 1.3% increase .Euro has started to erase earlier gains after reaching an intra-day high of 1.4267 as traders appear reluctant to become too bullish. There is still a fair amount of uncertainty pertaining to a global recovery and although there have been signs of improvement; broad based unemployment has limited the expected potential for a rebound in growth. The Euro-Zone current account showed that demand from abroad remains weak as exports fell by 5.9%. However, on a seasonal adjusted basis the deficit narrowed to -1.2 billion from -6.1 billion as it showed a surplus in the goods account. Meanwhile, French business confidence rose for a fourth straight month to 78 from 77 on improving household demand supporting the notion that the regions’ economy is stabilizing. The Pound continued its steady march higher reaching above 1.6500 after bottoming at 1.6309 yesterday. A 1.2% jump in retail sales help provide support but wasn’t the catalyst for the move. Consumer consumption rose after an unexpected 0.9% fall in May as apparel sales skyrocketed by 4.7%. The U.K. housing market also saw signs of improvement with home loans rising to 35,325 according to the British Banker’s Association. The rise in mortgages confirms the BoE’s lending report which called for improvement in home loans in the months ahead. However, the report also stated that credit for consumers and businesses continues to remain a challenge which could increase the chances of further quantitative easing from the central bank. However yesterday’s minutes from the MPC’s last policy meeting indicated that they are leaning toward ending the asset purchase program but will wait until they can better assess the impact of current actions .The dollar rose to 94.40 versus the yen staying away from a 5-month low .Japan posted a higher trade surplus in June as exports fell at a slower pace compared to imports, signaling that the worst of the recession in the global economy may be over. Data released by the Ministry of Finance showed that the trade surplus came in at JPY 508 billion in June much higher than the surplus of JPY104.1 billion last year.

Euro and pound picks up bull rally-Jul 23.

Euro tested 1.4160 before bouncing sharply with US futures. Once again trading above 1.4250 proved hard to sustain and the pair slipped into the close. European Factory Orders fell more than expected to -0.2% vs. 1.9% forecast in May but the rate of decline from previous months is decreasing. . Looking ahead, May EU Current Account previously at -9.2Bn. Sterling was weighed into the European open by UK Bank recapitalizes fears and leftover sour sentiment from BoE's comments. The MPC minutes were slightly more bullish than expected and help the pair to rally throughout the rest of the day. July CBI Industrial Orders -59 vs. -46 forecast. Looking ahead, June Retail Sales forecast at 0.4% vs. -0.6% previously.

Technical Outlook:
EURO chart pattern continue to extend its bullishness to 1.4330 and 1.4380 levels Parabolic and Relative strength index are supporting the bullish note but stochastic at overbought levels giving a caution for possible turn from overbought levels. Good support is seen at 1.4150 and 1.4120 levels.

GBP charts are giving sideways outlook. Currency has its immediate resistance at 1.6500 levels and break of which will push it to 1.6550 and 1.6580 levels. Good support is seen at 1.6430 if that level is broken then a test of 1.6375 is expected .Momentum and stochastic indicators are pointing down on daily charts.

Rupee remained in a narrow trade-Jul 23.

Rupee appreciated in early trade on increased dollar sales by exporters amid expectations of capital inflows by funds as market may open higher in line with firming trends on the other Asian equity markets .U.S. Dollar mixed results and US stocks kept most majors contained to their respective ranges. USD strength in Asia on profit taking was the theme but dip buyers emerged at the noted levels in the market. US House prices were up 0.9% in May and help ignite fresh risk appetite. Fed Chief Bernanke spoke again and was questioned by congress on the lack of consumer protections. Crude Oil closed down $0.21 at $65.40 in September contract.. Looking ahead Weekly Jobless claims are forecast at 550K vs. 522k previously. June Existing Home Sales are forecast 4.84M vs. 4.77M previously .

Technical Outlook:

USDINR charts are locked in 48.20-48.65 range Stochastic is trending down and has given bearish crossovers is expected to test the support levels only break below that level would trigger bearishness else currency is expected to pick up bullish momentum and rally to test 48.65 levels.. Immediate resistance is seen at 48.75. Currency is also seen trading on the moving average.

Evening Rupee-Jul 22.

The Indian Rupee edged higher tracking gains in regional share markets and other Asian currencies but the local stock market open will provide clues on direction of fund flows. The dollar has been firm overnight as we have started to see profit taking as risk appetite has started to wane with equity markets at key resistance levels. Earnings season will continue to generate focus as we saw several Dow components beat earnings estimates yesterday including Caterpillar. Watch for results from Boeing, Eli Lilly and Wells Fargo today to gauge sentiment. Additionally, Fed Chairman Ben Bernanke will continue his semi-annual testimony in front of the House Finance Committee which could also generate volatility. The central bank leader’s remarks saw markets reacted negatively to his warnings of continued rising unemployment levels and challenges for credit markets, but end on a positive note as the overall outlook was optimistic. MBA mortgage applications and the house price index today will provide insight in the housing sector but will take a back set today. The Euro is consolidating above 1.4164 despite an unexpected drop in Euro-Zone industrial new orders. Demand in May fell 0.2% versus expectations of a 1.9% gain as orders for durable consumer goods fell 1.5%. Consumers were reluctant to make purchases of long lasting items as they scrutinized discretionary purchases. However, a 0.4% increase in capital goods orders is a sign that the outlook from businesses is improving. Indeed, we saw French consumer spending in June jump 1.4% versus expectations of 0.3% led by a 3.5% rise in apparel purchases. The report also showed durable goods consumption rising by 1.3% which could be a sign of improving optimism. The sterling continued to be weighed overnight before a brief bout of bullish sentiment generated by the release of the BoE minutes from their July policy meeting. The central bank voted 9-0 to keep their benchmark rate and the amount of their asset purchase program unchanged as there was not enough evidence to support a change. However, the MPC went on to say that hey would keep the scale of their purchase program under review which could leave the door open for further quantitative measures. Bank of England Deputy Governor Charles Bean said that the central bank hadn’t put its quantitative easing program on hold which led to speculation that further measures would come at their August meeting when they issue their inflation report. However, the language in the minutes suggests that we will see the MPC continue to asses the impact of their prior efforts before taking further action. There are concerns that the asset purchase program isn’t generating the expected results which would negate the need for further purchases. Yet, Bean stated today that credit conditions will improve as banks regain confidence. He would also state that the U.K. economy has troughed and there are signs that things are improving. The yen rose as stocks snapped the longest rally in two years on concern the banking industry may take longer than expected to recover, boosting demand for the currencies as a refuge.

Euro and Pound direction less-Jul 22.

Euro broke through resistance at 1.4250 after the Canadian Interest Rate Decision but profit taking and mixed comments from Bernanke prompted fresh risk aversion matched by a fall in stocks at the US open to test support at 1.4160. A late US rally help the pair reclaim 1.4200 but upside momentum could start to wane if 1.4160 is broken on the downside today. Looking ahead, May Industrial Orders 1.9% vs. -1% previously. . Sterling was pressured by the PSNCR in June at 13.0B better than expected but still the worst on record for June and the market worried about UK finances sent the GBP lower. EUR/GBP jumped higher and GBP/JPY slumped. BoE Bean's comments about not wanting a strong recovery of the sterling also weighed. Looking ahead, July MPC minutes released and July CBI Distributive Trades forecast at -45 vs. -51 previously.

Technical outlook:
EURO chart pattern shows bearishness to 1.4150 levels and break below that should halt the bullish note and push it to 1.4050 levels. If the currency holds above the support level then bullish note holds good and will be extended to 1.4280 and 1.4330 levels in near term. Parabolic and momentum are still supporting the bullish note. Relative strength index is also seen flat hinting towards a range bound move.

GBP charts remains bearish but the current bearishness should be limited to 1.6320 levels but break below will trigger bearish outlook and extend to 1.6260 levels . Stochastic and momentum are seen trending down supported by parabolic pointing towards bearish note. Resistance holds at 1.6600 levels.

rupee weakend on stock clues-jul 22.

U.S. Dollar better than expected results from Caterpillar help US stocks extend their record breaking rally into a 7th day. A lot of Attention was given to Ben Bernanke's speech before the government in which he outlined the Fed's monetary policy and helped keep interest rates expectations down by offering a cautious outlook. Crude Oil closed up $0.74 at $65.70 in September contract. Looking ahead Bernanke speaks again and Crude Oil inventories are released at -1.9M vs. -2.8M previously.

Technical outlook
USDINR charts are expected to have a downward correction for the day and test the lower range of 48.20which holds as a very good support level break of which will take the currency to 48.10 and 47.95.But bullish outlook holds good for long term. Stochastic is trending down and is seen at oversold levels and is expected to turn up and pick up bullish momentum in near term. Immediate resistance is seen at 48.50 and 48.65 levels.

Evening Report-jul 21

The Indian rupee dropped as a lower stock market and the dollar's rebound against major currencies prompted investors to take profits a day after it posted its biggest one-day rise in two months.Capital flows into, and out of, the stock market are a key driver for the rupee.Dollar rose ahead of Federal Reserve Chairman Ben Bernanke's congressional testimony.The dollar has found support overnight as markets are anticipating that Fed Chairman Ben Bernanke will outline the central bank’s plan to tighten policy in order to prevent future inflation risks when the economy returns to growth. In a Wall St Journal piece today he talked about the need to tighten policy which triggered the volatility but was clear that an accommodative policy was the course for the foreseeable future. Therefore, we could see markets disappointed in his comments leading to dollar weakness. The economic calendar will present some event risk on the form of Chicago Fed national activity index which is expected to decline to -2.3 from -1.3. The slow down in activity could weigh on the outlook for growth especially if there is weak earnings from clue chip names like Caterpillar and Dupont. Event risk could come from the BoC rate decision, where the central bank is expected to keep rates on hold at 0.25% but could speak about their plans for quantitative easing.The Euro has traded sideways stuck in the range of 1.4190-1.4250 as dollar support and lingering risk appetite offset each other. An empty economic calendar has also contributed to the lack of volatility which we could see pick up as we proceed through the week with the PMI and German IFO readings on tap. The Swiss trade balance report did cross the wires showing the country’s surplus narrowing to 1.57B from 2.0B as exports declined 2.6%. European demand has continued to remain weak and is limiting growth for all of Europe. Therefore, the ECB may be forced to remain on hold despite the recent rhetoric from central banks on how to exit their current quantitative easing policies.Sterling has remained under pressure during overnight trading despite European equity markets higher for a seventh day. We are seeing profit taking ahead of testimony from Fed Chairman Ben Bernanke which could be potentially market moving today with a virtually empty economic calendar. The U.K. public finance report which showed the budget deficit rising to 13.0 billion added to the prevailing bearish sentiment sending.Bullish comments from Bank of England Deputy Governor for Monetary Policy Charlie Bean failed to reverse sentiment. The MPC member stated that the central bank is aiming to keep its benchmark interest rate at its record low level for as short a period as possible. He would go on to further state that he sees that the U.K. economy has bottomed. However, businesses continue to remain cautious which could limit the pace of a recovery. Japanese Yen lost ground against dollar as global sentiment turns against the greenback, the Bank of Japan board members all agreed that the Japanese economy had stopped worsening, minutes from monetary policy meeting revealed Moreover, they agreed that economy was likely to show clear signs of leveling out over time, in line with their projections made in April.

Euro and pound advances on risk rallies-Jul 21.

Euro with help from its crosses especially the EUR/JPY the EURO as stated above made a fresh leg higher into the 1.42's running out of steam just before 14250 but holding the level for the rest of the day. June German PPI at -0.1% vs. +0.5% confirmed that Producer Prices are falling at the fastest rate in 40 years as cheaper Oil and Higher Unemployment reduces demand. Sterling found strength in the improved risk appetite see in the market with US futures trading higher in Asia and 1.6500 broken on the topside. GBP/JPY provided a lot of support but so did EUR/GBP selling which was not an easy feat with the Euro also making major moves. Looking ahead PSNCR in June forecast at 20Bn vs. 18.78Bn previously.

Technical Outlook:

EURO chart pattern shows the possibility of profit booking to 1.4150 levels and break below that should halt the bullish note and push it to 1.4050 levels. If the currency holds above the support level then bullish note holds good and will be extended to 1.4330 levels in near term. Stochastic and momentum are still supporting the bullish note.

GBP charts remains bullish in near term , current bearishness should be limited to 1.6440 levels but break below will trigger bearish outlook and extend to 1.6380 levels . Stochastic is seen trending up supported by parabolic and the currency is also trading on the moving average Pointing towards the 1.6650 levels.

Rupee weakend due to importers buying-jul 21.

The Rupee depreciated against the dollar in early trade due to importers' demand for the US currency. Expectations of more capital inflows by foreign funds as stock markets may extend upward march, also checked fall in Indian rupee to some extent. U.S. Dollar was put squarely on the back foot as the largest currency pair EUR/USD broke through the topside of the recent range at 1.4200. Good news on the CIT front and a broad rally in the DOW let risk appetite surge and become the main theme of the trading day. Oil, GBP, CAD and AUD all made major gains. Looking ahead, Federal Reserve Chief Ben Bernanke to testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee in what could be a significant market moving event.

Technical Outlook:

USDINR charts seen on a profit taking note. Stochastic has given a turn from the oversold areas but crossover can only confirm the outlook .Currency is expected to take resistance at moving average level of 48.56/48.62 levels .Good support is seen at 48.09 and break below will take support at 47.95/47.75 levels.

Evening Report-Jul 20.

Indian rupee soared high against the U.S. dollar and closed at 48.19 levels as the local stock market rose more than 2%, while the dollar's weakness against major currencies overseas also underpinned sentiment. U.S dollar has come under pressure over night after a surge in risk appetite on the back of a possible solution for troubled lender CIT . The main credit source for over 300,000 small businesses has been on the brink of bankruptcy and may announce an agreement with bondholders to receive $3 billion in financing. The company’s possible bankruptcy has been seen as a possible shock to the system but the government’s refusal to save them was a vote of confidence that the economy was stable enough to withstand it. The removal of the threat has sparked optimism that the credit crisis is at the end leaving traders to focus on normal market conditions. Therefore corporate earnings will again garner focus this week with several blue chip names yet to report. The economic calendar is empty today and with only existing home sales as a potential market moving release on the week, the broader theme of risk appetite should continue to drive dollar flows. The Euro has reached back above the 1.4200 price level for the first time since June 5th, as European equity markets advanced for the sixth straight day. Currency traders chose to ignore the largest drop in 40 years for German producer prices as an improving outlook for growth offset the potential deflation risks. German factory gate prices fell 4.6% from a year ago, a full percentage point lower from May’s -3.6% reading. The continued disinflation for the region will keep the ECB on hold as they maintain their price stability focus and goal of maintaining inflation near their 2% target.The central bank appears to be in a wait and see mode as they look to assess the impact of their recently launched covered bond purchase program. They have settled EUR1 billion of the allocated EUR60 billion plan which is expected to be completed by the end of June 2010. We could see sentiment readings have a significant impact on price action this week with subdued interest rate expectations The Euro-Zone PMI and German IFO readings are due out and if optimism continues to build then we could see continued support for the Euro with a test of 1.4338.The Pound rose above 1.6500 as it found support from the improving outlook for global growth and continued signs that the U.K. housing market is stabilizing. Rightmove LLC reported that home prices in July rose by 0.6% which raised the annualized reading to -3.1% from -5.5% as an increase in lending is starting to underpin demand. The BoE released a report today that showed lending from the six major banks increased in June, which could inspire Britons to increase consumption and spur domestic growth. The improving outlook may continue to be a source of sterling support leading to a test of 1.6746. The dollar slipped against the yen and tested around 94.79 levels.Movement s were limited due to holiday in japan

Evening Report-Jul 16

Indian rupee dropped to its lowest level and closed at 48.69 levels weighed down by lower Asian stocks U.S. Dollar has consolidated its losses as investors await the next wave of earnings news. The greenback has been under pressure from positive earnings from Goldman Sachs and Intel. J.P. Morgan Chase will report today and give insight into whether the banking names are truly rebounding. Initial jobless claims are expected to remain below 600,000 for a second week at 550K which may reignite risk appetite and dollar weakness. However, the expected decline in the Philadelphia Fed manufacturing reading to -5 from -2.2 could reverse optimism found from yesterday’s strong industrial production results. Additionally, small business lender CIT is reporting that bankruptcy may be imminent as a government bailout is unlikely which could sink optimism. Its 300,000 customers may be forced to cut workers as they look to shed costs if they see their access to credit dry up. Euro seen on a bullish note as traders are awaiting the next significant news event to determine sentiment as the global economic outlook has become cloudy. French consumer prices crossed the wires with very little reaction with prices falling 0.5% versus expectations of -0.4% on a yearly basis. Falling crude prices continue to filter through the economy and declines in food and apparel underline the weak domestic demand. If Corporate earnings results continue to impress there could be reversal in risk appetite which could weigh on the Euro as the single currency has been highly correlated with equity markets. Pound has traded in a tight range due to an empty economic calendar and markets awaiting more earnings news. The better than expected U.K. employment figures have fueled speculation that the BoE will not have to add to their quantitative easing efforts. However, BoE policy maker Kate Barker that it is too early to asses the impact of their efforts on banks ability to lend. Therefore, next month the central bank may decide to add tot heir asset purchase program as they look to limit the risks of a double dip recession. Deputy Governor Charles Bean stated that too much shouldn’t be read into last month’s pause which could be a sign that more easing will come in August. Indeed, Prime Minister Gordon Brown stated today that the economic outlook still remains uncertain. Japanese yen advanced against its major counterparts as the Bank of Japan raised its economic assessment for the third month, citing an increase in public investment and pick-ups in exports and production BoJ had said Japan's economy is likely to show clearer evidence of leveling out over time.

Evening Report-Jul 14.

Indian rupee extended its morning session's downtrend against the US dollar during afternoon deals in India and closed at 48.92 levels as the currency continued to closely mirror the domestic share market with gains in other Asian units supporting sentiment. The dollar has continued to be under pressure during overnight trading as demand for risky assets has carried over through Asia and Europe after yesterday’s surprising rally in U.S. markets. An analyst upgrade of Goldman Sachs helped spur optimism that earnings may be better than expected especially for the beleaguered banking system. If we see the investment bank show signs of sustainable earnings in its quarterly report , then continued support for equities may weigh on the greenback. U.S. advance retail sales for June will cross the wires before the market open and is expected to show a 0.4% increase following last month’s 0.5% gain. An increase in consumer consumption will only fuel existing risk appetite and add more pressure to the greenback. However, if we see signs of weakness in domestic growth and other earnings reports such as Johnson & Johnson show that that consumers are continuing to retrench, then the outlook for earnings could dim as it had been leading into the week. Additionally the Goldman Sachs news may already be priced in to the market leading to a reversal despite the results. Also, PPI figures could add to bullish sentiment if we see an increase in pricing power. The Euro saw earlier gains generated on the back on the prevailing risk appetite reversed on a disappointing German Zew reading which declined for the first time in nine months. Investor confidence fell to 39.5 from 44.8 as concerns over the scope of a recovery has started to dim the outlook for growth. The reading significantly missed expectations of 47.8 which could be a sign that the recovery is stalling. However, Euro-Zone industrial production gained for the first time in nine months in May by 0.5% led by the 1.2% improvement ion capital goods. The increased investment is a strong sign of future growth and that the economy is at least stabilizing. Pound continued to rally despite inflation falling below the BoE’s 2% target for the first time since September 2007. The June consumer price index dropped to 1.8% from 2.2% which was the consensus from economists and in line with the central bank’s prediction that it would fall and remain below the target rate for the remainder of 2009. Rallying equity markets and bullish comments from MPC member Andre Posen helped send the GBP/USD over 1.6300. The fall in inflation was due to declines in several key categories including food, housing and clothing which led all sectors with a 1.4% decline. The decline in prices may force the central bank to add to their quantitative easing efforts at their next policy meeting in August which could begin to weigh on sterling as we approach decision time. Indeed, Andrew Posen would caution that short-term risks remain higher for deflation over inflation. He would go on to say that a deflationary situation is very difficult to emerge from and should generate greater concern. However, he did offer an optimistic outlook on growth stating that he was reasonably confident that the downturn will be overcome and would be surprised not to have positive growth by 2010. Yen gains are due to non-price-related motives for yen purchases like paying down carry trades as hedge funds de leverage.

Evening Report- Jul 13.

The Rupee pared loses and bounced from a two-month low in line with the trend in stock that also recovered partially. Currency closed at 49.08 levels. The dollar started to give back its gains as risk appetite returned during European trading but growth concerns has continued to generate support for the greenback. The economic calendar is relatively empty today with only the monthly budget ahead which is expected to show a -$86 billion as budget cuts pare spending. The main focus this week will be on the beginning of earnings season with Goldman Sachs, IBM and GE highlighting the list of those reporting. The concern is that we will see companies report modest gains as the benefits from their cost cutting start to dissipate. U.S. retail sales latter in the week is expected to show a modest rise, but millions of jobs lost over the past year is expected to limit domestic demand going forward. Therefore, the prevailing uncertainty and growth concerns should continue to be a supportive factor for the dollar. The Euro continues to remain range bound and with an empty economic docket the single currency has volatility has been driven by risk sentiment. European stocks started the day lower but have flirted with positive territory which has provided some support for the single currency. Range bound movement is seen as the ECB remains on hold as they assess the impact of their cover bind purchase program. The central bank is reluctant to go lower and it would take a shift in expectations for them to take the aggressive action. President Trichet has maintained that deflation isn’t a concern and that growth is expected to rerun by mid 2010. However, there are concerns that the troubles of the developing nations in Eastern Europe could have a weighing factor on the economy and increase the downside risks to growth. German Zew this week will present the most significant event risk. Sentiment indicators indicate that optimism is abating which would add weight to the single currency. The pound ran into resistance at 1.6363 as growth concerns and expectations that the BoE will add to their quantitative easing efforts at their August meeting when they release their quarterly inflation report. Tomorrow’s CPI report is forecasted to show inflation falling below the MPC’s 2% target to 1.8% which will increase speculation for the expansion . The central bank has maintained that prices will fall below their target and remain there for the remainder of 2009 which could threaten any growth prospects and derail any potential recovery. Japanese yen gained a little ground on their major rivals finding support as an uncertain outlook for equities increased the safe-haven appeal of lower-yielding currencies .Currency tested a low of 91.80 which would likely be triggered by a weakening macroeconomic outlook as well as deteriorating corporate earnings.

Euro and pound fell on speculation of expansion in IMF funding

Euro fell heavily from Thursday’s high as the market absorbed reports that Eastern European countries would be looking to expand IMF funding to help them through the financial crisis. Support from central banks help lift the Euro off lows under 1.3900 and end on a neutral footing. Looking ahead, ECB President Trichet Speaks today. Sterling was volatile but ended well off highs with GBP/JPY selling dragging Cable lower. Sentiment is mixed with the short covering seen after the BoE providing fresh selling opportunities but 1.6000 forming as a serious support zone. EUR/GBP continues to edge higher as risk aversion weighs on the pound more than the Euro.

Technical outlook:

EURO chart pattern remains bearish for the day. Currency continued it's bearish momentum .On daily chart currency is expected to test 1.3840 levels and have its resistance at 1.4050 levels. Currency is trading below the moving averages and momentum and stochastic are also trending down supporting the bearish outlook.

GBP daily chart shows bearishness and it is expected to test the support level of 1.6050 break of which will see 15980 levels .Key resistance for the currency is seen at 1.6260 levels .Momentum and stochastic indicators are seen trending down and parabolic is also supporting the bearish outlook.

Rupee weakend in early trade-Jul 13.

The Indian rupee extended losses after falling the most in four months last week as banks bought dollars in anticipation of foreign fund outflows from local shares. U.S. Dollar was stronger as mild risk aversion supported and Crude Oil dipped to new lows. USD/JPY was the exception as the Yen remained the first choice for safe haven flows. US May Trade Balance improved unexpectedly to -26Bn vs. -30Bn previously. This was tempered however as UoM Consumer sentiment in July dropped to 64 from 70 previously, confirming the drop seen in the recent CB survey. Looking ahead, June Fed Budget forecast at -97Bn vs. 33Bn previously.

Technical Outlook:

USDINR charts is expected to remain range bound and trade in the range of 48.71-49.42 levels .Good support is seen at 48.62 and key resistance is seen at 49.55 levels .Stochastic indicators are pointing up and market is also trading near to upper bollingers giving probability of small profit booking.

Evening Report-Jul 07.

The Rupee closed at 48.44 per dollar tracking domestic shares, bond yields rose further on concerns of excess supply.U.S. dollar started to regain its footing overnight after a reversal in risk appetite yesterday had the greenback under pressure. An improvement in ISM Non-manufacturing to 47.0 from 44.0 helped spur optimism, as the indicator also showed a significant pick up in the employment component which helped eased concerns over the disappointing NFP report. We may see price action continue to oscillate as traders weigh the significance of each piece of fundamental data. ABC consumer confidence is the only release due today and the second tier indicator shouldn’t have an impact on price action as the expected improvement to -50 from -51 is relatively unchanged. U.S. futures are pointing toward a lower open which could lead to dollar strength if risk aversion prevails on the day. However, we are seeing bullish sentiment in Europe which is starting to lead to dollar weakness. Euro reversed earlier losses as positive equity markets have helped spur demand for the single currency. The biggest gain in German factory orders helped fuel further Euro demand as activity rose by 4.4% versus expectations of 0.5%. The data supported earlier comments from ECB member Miguel Fernandez Ordonez who was touting a global recovery by 2010. The Bank of Spain governor also said that deflation risks didn’t exist for the region and that in Spain that it would actually be a positive for the competitiveness of their industries. Concerns over Spain has been a weighing factor for the Euro as there are concerns that outside of the major economies on the region the rest will struggle to find growth over the near-term. The upcoming G-8 meeting will provide some event risk for the Euro as we have started to see ECB President Trichet call for the U.S. to defend the dollar which could be a veiled attempt to try and spur Euro weakness. Additionally if we see more talk of replacing the dollar as the world reserve currency then the Euro could find support as a possible substitute. he Pound surprisingly found brief support following a disappointing industrial production release helping reverse earlier losses which saw the GBP/USD falling to 1.6150. Sterling had been under pressure as speculation that the BoE would increase their quantitative easing measures was reinforced by the British Chambers of Commerce says recovery 'is not guaranteed,' and urging the central bank to expand its asset purchase program by £25B. Industrial activity in the country unexpectedly fell by 0.6% versus forecasts of a 0.2% gain led by a 2.1% drop in mining. Manufacturing production also missed expectations of 0.2% improvement with a 0.5% decline. The first drop in activity in the last three months will raise concerns over the viability of a recovery for the U.K. and may be enough to inspire the BoE to add to their assets purchase program. The central bank was widely expected to stand pat until they assessed the impact of the initial £125 which they are scheduled to complete at the end of the month. However as we head into earning season there is a concern that corporate profits will be subdued which could weigh on optimism and threaten to stall current momentum. Japanese yen edged higher against its major counterparts prompting investors to reduce holdings of higher-yielding assets. The yen and the dollar rose on speculation the global recovery is faltering, while government bonds dropped as nations prepared debt sales to revive their economies.

Evening Report-Jul 06.

The Indian rupee dropped and closed at 48.54 levels tracking the domestic sharemarket which fell nearly 6% percent after the announcement in the budget.The government said its fiscal deficit would blow out to the biggest level in 16 years as it boosts spending to support the slowing economy disappointing investors who dumped stocks and bonds.Budget documents showed the government's gross market borrowing in the current fiscal year would total a record 4.51 trillion rupees .States should remove bottlenecks for infrastructure projects, and outlined plans for more flexible financing for infrastructure and development of long-distance gas pipelines. New government had a freer hand to implement economic liberalisation measures to drive expansion, but focused instead on rural development and support of social programmes.The dollar is receiving significant support as the flight to safety continues as fears grow that the scope of a global recovery will limited. We could see U.S. traders look to catch up on the prevailing risk aversion which could accelerate greenback strength throughout the day. Additionally, Vice-President Joe Biden admitting the Obama administration missed judged the recovery and the level of unemployment may harpoon investor confidence. The only release on the economic docket is ISM non-manufacturing which is forecasted to rise to 46 from 44. A rise in the sector that accounts for over 70% of GDP could offset some concerns and limit dollar support. We have started to see the dollar strength begin to wane and the positive data could spark a reversal in sentiment. Conversely, a weaker than expected print would justify building fears and add to prevailing dollar strength. The Euro was also a victim of prevailing risk aversion as thecurrency fell below 1.3900 handle where it has started to consolidate. The Euro-Zoe Sentix investor confidence reading unexpectedly fell for the first time in three months to -31.3 from -27. Economists were expecting an improvement in sentiment to -25 as optimism had been building on the back of lower interest rates and incoming stimulus efforts. Concerns are growing globally that the depth of the recession will make it difficult for the labor market to find traction limiting the potential of any recovery. The Pound fell over 200 pips following a report that the BoE will announce additional quantitative easing at their upcoming policy meeting. Speculation is that another £25 billion will be added to the original £125 billion asset purchase program which is coming to an end. The MPC is expected to keep its benchmark rate at 0.50% on Thursday as downside risks remain for the economy. Indeed, growth contracted by 2.4% in the first quarter which was the most since 1958 which will limit the impact of the government’s efforts to promote growth.The Yen has benefitted from increasing growth concerns and a rise the outlook for the regional economy from the BoJ. Indeed the central bank in its report raised its assessment for the region for the first time in three years. A rise in exports has fueled optimism that he region is finally stabilizing. BoJ Governor said there are signs of a slowdown in the speed of deterioration both in financial aspects and the real economy.

Eveninf Report-Jul 02.

Highlights of Eco Survey
Capital market showing signs of revival which is visible in the increasing interest and confidence of both the domestic and foreign institutional investors.
To bridge the rural-urban digital divide, the Economic Survey 2008-09 on Thursday suggested the government to do away with annual license fee and other charges on provision of broadband connectivity to the hinterlands.
To avoid the possibility of conflict between monetary and debt management functions of the RBI, the Economic Survey today prescribed setting up of an independent office to manage the Government debt
Economic Survey calls for multi-format retailing-Survey has advocated sweeping policy changes like foreign investment in multi-brand retailing and higher foreign stake in insurance companies.
Auto sector turnover crosses Rs 2 lakh cr; employs 10 million
Better fiscal health of states led to 2003-08 growth-Improvement in the fiscal health of particularly the states and the Center led the high growth trajectory of the period FY'04 to FY'08
Zero fiscal deficit target; suggests Eco Survey with riders-government should assess the possibility of having a new target of entirely eliminating fiscal deficit, but with a flexibility that it could be widened at a time of economic downturn
Economic survey calls for Factories Act amendment
$500 bn infrastructure spending difficult:
India needs to fully open its retail market to foreign investors in order to drive economic growth, although the subject was strictly taboo till last year because of pressure from the government's allies and livelihood concerns.
Market updates
The Rupee weakened slightly and closed at 47.95 after local stocks fell but the government's Economic Survey raised expectations of more capital inflows, checking the falls. The dollar has been supported despite a report that China will allow companies to undertake settlement of cross-border trade in the yuan and offer them tax breaks, seeking to reduce the reliance of importers and exporters on the U.S. Dollar. The 4th of July holiday has set up an unusual economic calendar where we have the Non-farm Payroll release on a Thursday. Economists are forecasting that the economy lost another 365,000 jobs in June which would be 20,000 more than the month prior which could spark risk aversion and dollar support. However, following six months of losses above 500,000 consecutive periods below the lofty number could be an encouraging sign for traders. Initial jobless claims will also add some insight to the labor market and another week above 600,000 will help dim the outlook for a recovery. Euro has steadily traded lower reaching below 1.4090 ahead of the ECB rate decision but has started to consolidate despite the Euro-Zone unemployment rising to a decade high of 9.5% in May. Early forecasts were for a rise to 9.4% as companies continue to shed workers as they try and cut costs to survive the current recession. Meanwhile, producer prices dropped to a record low -5.8% in May from -4.6% on a yearly basis. The month saw prices unexpectedly fall 0.2% versus expectations of a 0.1% gain, as costs of intermediate goods dropped 0.3%.The inflation report will give the ECB food for thought at today’s policy meeting but shouldn’t impact their rate decision with their consistent contention that deflation isn’t a concern. The central bank is expected to keep rates on hold at a record low 1.00% which they have maintained is appropriate given the current environment. The committee will most likely stick to their measured approach and look to assess the impact of their covered bond purchase program before taking further action. The question is whether they have put in a floor on interest rates or is the door open for further easing. Therefore, we may see limited price action until President Trichet gives his statement and answers to questions from the press. Pound has traded heavy and saw losses slowed after a BoE report showed credit to households increased. The central bank’s quarterly report on credit conditions showed the supply of secured credit to households had increased but that unsecured credit was less available. Lenders also reported an increase in credit to the corporate sector which will help aide an economic recovery. However, new MPC member David Miles said that the banking sector is on life support and return of growth isn't a probable outcome, despite slight improvement in housing. Also, the PMI construction report unexpectedly showed a decline in the sector to 44.5 from 45.9. The dimming prospects for a robust recovery may continue to weigh in the pound . Yen strengthened and was seen at 96.62 levels as stocks around the world declined before a report likely to show the U.S. unemployment rate rose to a 26-year high spurring demand for the currencies as a refuge.

Evening Report-Jul 01.

The rupee traded weaker against the dollar with the dollar gaining ground against most major global currencies. However a upswing in stocks checked losses. However the Indian Unit closed at 47.89 levels for the day. The dollar has been choppy overnight after yesterday’s gains on the back of the weaker consumer confidence reading. The dollar positive reaction to the fall in risk appetite keeps the correlation relevant in determining future price action. Therefore, we could see greenback weakness following the ADP jobs report which is forecasted to show the economy lost 394K jobs an improvement from -532K in May. The report is an early indicator for the upcoming Non-farm payroll and generally produces a strong initial reaction. The ISM manufacturing report will also impact dollar sentiment and the expected improvement to 44.6 from 452.8 will also generate risk appetite. The improvement in the global cyclical indicator will raise hopes of a global recovery which could pressure. However a flat pending home sales print and negative construction spending will raise concerns over the housing sector which remains the key to a U.S. recovery and may dampen optimism and lend dollar support. The Euro found support from higher German retail sales and Euro-Zone PMI to a high of 1.4088 but has started to consolidate leaving downside risks. Consumer consumption in the region’s largest economy increased 0.4% in May, as it improved for the third straight month on improving confidence. Yet, the -2.9% decline from a year earlier provides perspective on how deep the economy has contracted. Meanwhile, the final June PMI reading was revised higher to 42.6 from 42.4 which was the slowest rate of contraction in nine months. Signs that the recession is slowing will allow the ECB to keep rates unchanged at tomorrow’s policy meeting. Credit Suisse overnight index swaps are pricing in 39.8 basis points of a rate increase over the next twelve months which is significantly down from the 73.3 that we saw on June 12th as the theory that the central bank will be the first to begin tightening on inflation concerns is losing steam. Deflationary pressure and considerable downside risks to the economy remain, especially in troubled countries like Spain. Therefore, we could see the downside risks to the single currency increase if President Trichet acknowledges these pitfalls and leaves the door open for a future rate cut. Pound has seen choppy price action as it tries to consolidate yesterday’s losses generated by the weaker than expected GDP figures and dollar support. A better than expected PMI manufacturing reading to 47.0 from 45.4 which was the highest since May 2008 provided a brief bout of support as the economy continues to show signs of stabilizing. However, sterling has steadily declined against the Euro and a break below the technical level could lead to extended losses. A concern for pound bulls will be the 10th straight decline in the index of services which fell 1.2%. The sector accounts for 70% of the economy and unless domestic growth significantly improves the outlook for a recovery will dim. Yen Steady Against Majors after BoJ's Q2 Tankan Survey Report .The Bank of Japan released its quarterly Tankan Survey which showed the large manufacturing index to post a score of -43 up from the record low of -58 in the first quarter. At the same time, the large manufacturers' outlook is forecast at -34, up from -51. The non-manufacturing index is projected at -27, up from -31. But all-industry capex fell to 6.9 percent in Q1.