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.