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.