vkc research

Yen weakendin early trade-Sep 15.

2009-09-14T23:25:00.000-07:00

Japanese Yen USD/JPY found support from USD strength early in the day and then continued higher as Yen Crosses rebounded from selling last week. The 90 level on the Yen remains intact and the market is very short the USD/JPY which could lead to a sharp short covering rally in US interest rate expectations change. .Technically speaking USDJPY charts have picked up small bullish momentum and is expected to trade in the range of 90.30-91.80 levels .Key resistance for the currency is seen at 92.00 . Good support is seen at 90.20 levels. Momentum and stochastic are seen trending up from oversold areas giving slight bullishness to the currency.

Euro and sterling gained from Asian selling-Sep 15.

2009-09-14T23:24:00.000-07:00

Euro found support from Asian selling at 1.4520 and bounced hard into the US session setting fresh year highs above 1.4650. Strong US stocks and stops helped provide momentum. The Rally stalled at highs but found support in the low 1.4600 area to end well supported at the close. July Industrial production -0.3% vs. -0.2% forecast. Looking ahead, September German ZEW survey forecast at 60 vs. 56 previously.On technical side EURUSD is expected to have a tight trading range of 1.4530-1.4640 levels .Good support is seen at 1.4500 . Key resistance is seen at 1.4660 levels. Stochastic and momentum is seen trending down supporting the downward correction.

Sterling led the market on the way down yesterday with the market falling heavily on risk aversion and traders caught long after the rally on Thursday and Friday last week. GBP/JPY bounced off the 150 Yen level and Cable bounced off the 1.6520 supports but the recovery lagged the Euro and EUR/GBP ended the day above 0.88. Looking ahead, August CPI is forecast at 0.3% vs. 0.0% previously. Sterling charts are expected to give bullish consolidation and trade in the range of 1.6530-1.6680 levels. Relative strength Index and momentum are seen trending down giving bearish outlook . Good support is seen at 1.6510 and key resistance is seen at 1.6740 .

Trade dispute between china and US weakend the dollar-Sep 15

2009-09-14T23:22:00.000-07:00

U.S. Dollar strengthened at the open across the board as the Nikkei slumped over 2% on concerns a trade dispute between the US and China could unravel into a trade war. Obama's speech on financial regulation was largely as expected and Fed speak from Yellen and Lacker offered little new in terms of exit strategy. US investors shrugged off the bad lead from Asia and US stocks ended higher sending the USD to fresh year lows against the Euro. Looking ahead, August Core Retail Sales forecast at 0.4% vs. -0.6% previously. Also released, August PPI forecast at 0.8% vs. -0.9% previously. Indian Rupee rose supported by the dollar's weakness against major currencies and higher Asian shares . Technically Indian unit has given a higher open and is expected to trade in the range of 48.48-48.80 levels. Good support is seen at 48.42 and key resistance remains at 48.88 levels for the day. Stochastic is seen trending down but crossovers are needed to confirm the trend.

Euro and pound weakens against dollar-aug 27

2009-08-26T22:50:00.000-07:00

The Euro German IFO was strong as expected and helped the Euro touch day highs at 1.4350 before sellers returned and slammed the pair lower on stalling stocks and fresh USD strength. Positive sentiment is failing to produce the desired results for the bulls who are becoming frustrated with the lack of progress. Looking ahead, German GFK forecast at 3.7 vs. 3.5 previously.On technical side EURUSD are seen on a bearish move is expected to trade in the range of 1.4190 -1.4320 levels . Stochastic and momentum indicators are bearish and currency is also trading below the moving average confirming the bear trend. Key resistance seen at 1.4350 levels .Good support is seen at 1.4150.

The Sterling continued the slump on the above China news breaking support at 1.6300 to test 6 week lows below 1.6200. GBP/JPY was weak and EUR/GBP tested 0.8800. The outlook is beginning to turn very bearish as momentum develops on the downside. Looking ahead, August CBI distributive trades forecast at -13 vs. -15 previously. Sterling charts are giving downward correction and the currency is expected to have a trading range of 1.6160-1.6320. Stochastic and momentum are seen trending down giving bearish outlook . Good support is seen at 1.6150 and key resistance is seen at 1.6350.Parabolic is also seen supporting the bearish outlook.

Rupee dollar fell on month end demands-aug 27.

2009-08-26T22:48:00.001-07:00

U.S. Dollar strong US data failed to inspire fresh stock gains. News of China curbing investment sent commodities and risk currencies lower. New Homes sales rose 9% as expected and Durable Goods rose 4.9% vs. 3% forecast. One Dampener was core Durable goods that came in at 0.8% vs. 0.9% forecast. USD strength on the back of strong US data is new phenomenon starting to be digested by the markets. Looking ahead, Q2 Preliminary GDP is forecast at -1.5%. The Rupee edged lower in early trade as the dollar's gains versus majors overseas coupled with month-end dollar demand from importers and oil refiners hurt. Technically Indian unit is seen on a bull note and the currency is expected to take resistance at 49.12 levels .Currency is expected to trade in the range of 48.85- 49.08 levels for the day. Stochastic and Relative strength Index are still trending up .Good support is seen at 48.79 currency is also trading above the moving average confirming the uptrend. But caution required as market is in overbought areas.

Evening Report-jul 24

2009-07-24T04:50:00.000-07:00

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.

2009-07-23T22:57:00.000-07:00

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.

2009-07-23T22:50:00.000-07:00

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.

2009-07-23T05:16:00.000-07:00

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.

2009-07-23T05:12:00.000-07:00

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.

2009-07-23T05:10:00.000-07:00

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.

2009-07-22T05:05:00.000-07:00

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.

2009-07-22T05:03:00.000-07:00

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.

2009-07-22T05:01:00.000-07:00

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

2009-07-21T05:10:00.001-07:00

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.

2009-07-20T23:37:00.000-07:00

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.

2009-07-20T23:31:00.000-07:00

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.

2009-07-20T04:51:00.000-07:00

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

2009-07-16T05:16:00.000-07:00

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.

2009-07-14T05:05:00.000-07:00

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.

2009-07-13T05:08:00.000-07:00

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

2009-07-13T05:05:00.000-07:00

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.

2009-07-13T05:03:00.000-07:00

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.

2009-07-07T05:12:00.000-07:00

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.

2009-07-06T04:46:00.000-07:00

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.

2009-07-02T05:06:00.000-07:00

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.

2009-07-01T04:54:00.000-07:00

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.

Evening Report-Jun 30.

2009-06-30T04:57:00.000-07:00

The Indian rupee erased gains after rising on customary month-end dollar demand from refiners and closed at 47.90 levels for the day. U.S dollar has started to regain its footing after rising oil prices and higher equity prices kept it under pressure during Asian trading. Slow growth and rising unemployment in Europe is weighing on risk appetite and could lead to dollar support heading into U.S. trading. However, the expected rise in consumer confidence to 55.3 from 54.9, which would be the highest since September 2008, could fuel demand for risky assets. Additionally, Chicago PMI is forecasted to rise to 39.0 from 34.9 as manufacturing steadily improves which will raise expectations for domestic growth and future employment. Therefore we could see the greenback trade lower on increased optimism and increased risk appetite. However, the S&P Case-Shiller house price data is also ahead and weakness in the housing market could dim the outlook for a recovery. Euro bulls have regained control after a brief sell off following weak money supply figures and German unemployment reaching 8.3%-the highest since June 2007. Although, we saw a 31,000 increase in the number of unemployed Germans it was less than the 45,000 that economists were expecting. The Euro-zone June CPI-estimate also printed better than expected at -0.1% versus -0.2% which will help the ECB keep rates at 1.00% as they maintain their price stability focus. Policy members have consistently maintained that rates are appropriate and unless we see the risks of deflation substantially increase a bottom may be in place at the current record low. Pound would set a fresh yearly high of 1.6746 before the final reading of 1Q GDP showed the lowest quarterly growth since 1958 of -2.4% down from -1.9%. The steeper than expected contraction dragged the annualized reading to -4.9% versus expectations of -4.3%. Total business investment in the country fell by 7.9% which was the most since September dimming the prospects for future growth. Meanwhile, Nationwide LLC showed that house prices rose 0.9% in June which helped support earlier bullish sentiment. The BoE’s success in their bond purchase program continues to raise optimism for the U.K. economy. The central banks aggressiveness in their monetary policy to start the year is starting to pay dividends which continue to provide sterling support. Our contention that we may be seeing the pound become overvalued was supported by the weak growth numbers including a 1.3% drop in household spending and exports falling for a fourth quarter by 6.9%.Japanese Yen Erased Earlier Losses and was seen trading at 95.83 and plummeted against their key counterparts as hopes of an economic recovery increased risk appetite to buy higher-yielding assets. Sentiment in Japan was helped by news that household spending in May rose 0.3% on year, up for the first time in 15 months, and beating expectations for a 1.5% decline But that was tempered by the release of the May jobless rate, which rose to 5.2%, the highest since September 2003, from 5.0% in April. Analysts had expected an increase of 5.1% for May

Euro and Pound rallied aginst the dollar on optimism in global shares-Jun 30.

2009-06-30T04:30:00.000-07:00

Dollar weakened against the Euro as Asian stocks advanced on speculation the global recession is easing, damping demand for the U.S. currency as a refuge.Dollar weakened against the Pound on optimism the global slump is waning, reducing the U.S. currency’s appeal as a refuge. Confidence among U.S. consumers rose to 55.3 .The Conference Board will release the sentiment index at 10 a.m. in Washington

Technical View:
EURO is expected to be on a bull note and trade in the range of 1.4050-1.4150 levels. With good support seen at 1.3980 and key resistance is seen at 1.4205 levels. Momentum and stochastic are seen trending up and the currency is also seen trading above the moving averages confirming the bull note but certain amount of profit booking is expected at 1.4150 levels and if able to sustain above this level then it may extent its rally to the resistance.

GBP chart pattern shows a upper break of the flag pattern to test the immediate resistance level of 1.6680 and 1.6700 levels .Good support is seen at 1.6480.Momentum and stochastic indicators are pointing towards bull rally but caution required as market is in overbought areas giving possibility of reversal.

Rupee in choppy trade-Jun 30.

2009-06-30T04:28:00.000-07:00

Indian rupee appreciated to a two-week high against the dollar in early trade on expectations of increased capital inflows by foreign funds following firm Asian stock markets. US data had a weak tone as Chicago Fed activity weaker than previous and Dallas Fed manufacturing weaker than market expectations. Despite this the S&P500 opened strongly and held onto the gains through the session, up 1.0% near the close. Quarter end window dressing seemed to be the main factor behind the strength.USDINR chart pattern shows a range bound move between 47.70-48.08 levels for the day. Good support is seen at 47.65 and key resistance at 48.12 levels .Currency is trading below the moving average level and stochastic is also seen trending down hinting towards the possibility of small downward correction.

Evening Report-Jun 29.

2009-06-29T04:54:00.000-07:00

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.

Evening Report-Jun 25.

2009-06-25T04:58:00.001-07:00

Rupee gave up some of its gains and closed at 48.59 after local stocks gave up earlier gains to turn negative.Dollar was mixed overnight as we have started to see it consolidate its gains from yesterday derived from the FOMC rate decision. The central bank squashed any ideas that they would add to their bond purchase program. Policy makers also continued their view that inflation would remain subdued for sometime, which should limit speculation about future rate hikes which could lead to a dollar neutral stance from investors. The final U.S. GDP reading for the fist quarter is due to cross the wires unchanged from the preliminary print of -5.7%. An upward revision would raise speculation for future growth for the U.S. economy and based on the bullish price action from yesterday we continues dollar support. An inline print would leave initial jobless claims as the main driver of price action on the economic calendar. A drop below the forecasted 600K could ease concerns that rising unemployment will limit any potential recovery and add to greenback bullish sentiment. Euro has started to consolidate its losses from yesterday despite a unexpected drop in April’s industrial new orders which fell for a ninth month by 1.0% versus expectations of 0.0%. Activity decline 35.5% from a year ago as the economy continues to be hurt by slumping global demand. Positive data from Italy which isn’t typically market moving, but considering the country was one of the first to fell the impact of the downturn could be a sign things are bottoming. A rise in exports by 0.5% in May turned a trade balance deficit into a surplus of 555.0 million. This translated into Italian business confidence rising to 98.5 which was the highest in eight months. A 2.4% drop in capital goods which includes new buildings and machinery led the decline in demand which could limit future economic growth. The lack of investment in new projects will make it difficult for companies to generate above average returns and will limit profits and hiring going forward. The OECD called for the ECB to cut rates as they see rising unemployment as a hindrance of future growth for the economy. We don’t expect the ECB to lower rates below 1.0% as they have insisted that it is the floor for their easing, which could limit the scope of the recovery for the 16-member union. Pound has come under pressure as dovish comments from BoE governor Mervyn King yesterday continues to impact price action. The central bank leader said that "I feel more uncertain now than ever. This is a pattern of recession that we've not seen since the 1930s," and that an economic recovery could still be a "long, hard slog" despite encouraging data recently. The yen fell the most in three weeks after the Federal Reserve signaled the recession is easing, damping demand for the Japanese currency as a refuge in favor of higher-yielding assets.

Yen Falls after FOMC-Jun 25.

2009-06-24T23:10:00.000-07:00

Japanese Yen popped above 96 after the USD FOMC boost. Crosses were well supported during the day although weak stocks saw them finish roughly flat. Stock market losses are hurting the uptrend seen in the AUD/JPY which risks further pullback as investor optimism wanes. Looking ahead, June Nationwide Core CPI forecast at -1.2% y/y. Chart is expected to have a small bullish correction for the day . With the trading range between 95.60- 96.80 levels. Stochastic and Relative strength index are seen trending up .Currency is trading above the moving averages and momentum is also supporting the bull note. Good resistance at 97.10 levels and support is seen at 95.40 levels.

USD strength won over Cable and Euros-Jun 25.

2009-06-24T23:06:00.000-07:00

Euro traded above 1.4100 as the Euro hit highs in Early Europe before falling as the USD was supported by a good Treasury auction and secondly by the FOMC comments excluding deflation talk. Stocks and Oil continue to underpin the Euro going forward. Looking ahead, April Industrial Orders are forecast at 0.0% vs. -0.8% previously. Sterling was well supported by investors but USD strength won in the end pushing the pair from 1.6600 to 1.6400 late in the US session. The lack of expansion in US Treasury Buying from the FED supported the dollar post FOMC. EUR/GBP slipped back under 0.8500.

Technical Outlook:

EURO chart pattern shows a neutral trend. Trading range for the day is expected to be between 1.3880-1.4080 levels for the day. With good support seen at 1.3850 and key resistance is seen at 1.4150.Stochastic is trending up but crossovers will confirm the trend. Momentum indicators are pointing down and is expected to test the support level before resuming the bullishness.

GBP chart pattern points a sideways to bullish move. Trading range for the day is expected to be between 1.6350-1.6530 levels for the day. Stochastic and the Relative strength index are seen trending up but momentum is seen trending down hinting that there will be a potential downward correction to 1.6350 levels .Currency is trading little above the moving average giving bullish crossover.

Rupee rose on account of foreign fund flows-Jun 25.

2009-06-24T23:04:00.000-07:00

Rupee rose as gains in Asian stocks spurred foreign fund flows into local shares. U.S. Dollar continued to trade in a wide range with the market selling USD ahead of the FOMC only to buy them back after a less dovish than expected statement. Adding to USD strength was reports that the SNB was intervening on CHF through USD/CHF in a dramatic move yesterday. Weak stocks in the US let the USD keep most of the gains into the US close .Looking ahead, Weekly jobless claims are forecast at 600 vs. 608K previously. Also released, Final GDP Q1 forecast to remain at -5.7% q/q.

Technical View:

USDINR chart pattern is seen on a range bound move. If the currency is able to break 48.62 levels it will resume its bullishness to 48.82 levels .Currency it is trading on the moving averages remaining sideways .Good support is seen at the average level of 48.45 break below will take it to 48.32 levels for the day.

Evening Report-Jun 24.

2009-06-24T04:50:00.000-07:00

The Rupee gained marginally but was still trading near one-month lows as the dollar lost ground against the global majors and shares continued to trade choppy.Indian Unit gave a low of 48.35 but shed some of its gains and closed at 48.51 levels for the day.U.S. durable goods orders are expected to have fallen by 0.9% in May after a 1.7% improvement the month prior. It would be the second decline in the last two months and a sign that companies remain cautious despite signs of a recovery. The biggest obstacle for a rebound in growth may be the psychological impact on businesses and consumers as they may remain tepid for sometime. Therefore, considering that prospect we could see dovish comments from Fed Chairman Bernanke after today’s policy decision. The FOMC is expected to keep the Feds Fund rate at 0%-0.25% as downside risks remain for the economy. A dour outlook from the central bank could spark risk aversion and dollar support. Conversely there are enough signs that a recovery is imminent with the rate of job losses slowing to 345K from 504K Euro has started to trade lower after the OECD’s call for an ECB rate cut but the single currency has resumed its bullish momentum. The international economic organization has forecasted that growth will contract by 4.8% and become flat for the economic union. Meanwhile, the Euro-Zone current account saw its deficit shrink from -7.0 to -5.9 billion as the tradable goods balance swung to a surplus. Also crossing the wires was mixed Italian data with consumer confidence rising to an 18 month high of 105.4, while retail sales unexpectedly fell by 0.4%. The Organization for Economic Cooperation and Development said that the central bank should lower rates toward zero and keep them there until the economy is revived. Pound rose to as high as 1.6596 as European equity markets followed Asia’s lead with a strong open. The sterling began to trade heavy after the OECD report but has started to regain its footing and is looking to test the intra-day high. The U.K. economy’s growth forecast was downgraded to -4.3% from -3.7% as the country’s housing slump continues to be a weighing factor. The 6/3 high of 1.665 remains as formidable resistance and although we could see a test of the level, a sharp reversal remains a possibility. Japanese yen weakened against higher-yielding currencies after the Organization for Economic Cooperation and Development forecast the world’s leading industrialized nations will expand next year.

Evening Report-Jun 23.

2009-06-23T04:55:00.003-07:00

The Rupee gave up some of the losses and closed at 48.56 as the local share market recouped most of its losses on short covering. The dollar has started to give back some of its gains from the past two days despite the dimming outlook for a global recovery. Concerns that current valuations in equities aren’t justified if we see a mild recovery had sunk equity markets. However we have seen European indexes reverse losses as deep as 4% with the FTSE and DAX turning positive. U.S. existing home sales for May is due for release and the 4.82 million that is expected would be the highest. Although it is far from the ten year average of 5.83 it could be a sign the sector is stabilizing and may add to the renewed risk appetite. The Richmond Fed manufacturing reading is forecasted to be positive for a consecutive month with a reading of 5 which would be the highest since March 2008. Bullish potential exists for the dollar as uncertainty over the pace of the recovery remains and today’s weakness could be a buying opportunity. Euro quickly erased earlier losses at the beginning of European trading to trade above 1.3940 as equity markets reversed and improving fundamental data helped add to bullish sentiment. Stocks opened down over 2% across the board but a sharp reversal in risk appetite saw several of the major indices turn positive. Improvements in German Gfk consumer confidence to 2.9 from 2.6 and the French business confidence indicator to 75 from 73 showed that optimism continues to build. Adding to the bullish sentiment and signs the economy is stabilizing was a rise in Euro-zone PMI manufacturing to 42.4 from 40.7. However, an unexpected drop in PMI services to 44.5 from 44.8 and French consumer spending by 0.2% raised some red flags as risks remain to growth. President Trichet stated today that interest rates are currently appropriate and that the central bank is obliged to focus on price stability. A break of either bound could lead to a longer term trend in either direction. At this time we still favor a bearish bias with the single currency’s correlation to equity markets and the prevailing view that current prices aren’t supported by existing data. Pound continued to see choppy price action despite bullish comments from BoE chief economist Dale that initial signs were encouraging from quantitative easing efforts. Although, he would state that it is still too early to evaluate the full impact, but “The growth rate of underlying broad money has picked up in recent months,” and “it is likely that yields are lower than they would have been” for gilts. A rise in BBA loans for House purchase to 31K from 29K added to evidence that credit markets are thawing and beginning to normalize which should start to translate into future growth. However the sterling may have most of the expected improvement priced into the currency which increases its downside risks. U.S. currency also dropped versus the yen as the Federal Open Market Committee prepared to start a two-day rate- setting meeting today .JPY rose benefiting from creeping doubts about the sustainability of any economic recovery .Concerns about reserve diversification away from U.S. assets caused the dollar to turn lower against the Euro after Moody's said one risk to the U.S.' triple-A rating is if the dollar is challenged as the main reserve currency.

Evening Report-Jun 23.

2009-06-23T04:55:00.001-07:00

Yen gained as Asian Stocks slumped-Jun 23.

2009-06-23T00:51:00.000-07:00

Yen strengthened as Asian stocks slumped on concern the global recession will be prolonged, spurring demand for the relative safety of Japan’s currency. currency gained on speculation -that U.S. report tomorrow may show durable-goods orders declined. chart is expected to have a bearish correction for the day . With the trading range between 94.60- 95.40 levels. Stochastic and Relative strength index are seen trending down giving bearish crossovers .Currency is trading below the moving averages giving bearish crossover. Good resistance at 96.00 levels and support is seen at 94.20 levels.

Euro and Pound fell on USD strength-Jun 23.

2009-06-23T00:47:00.000-07:00

Euro will probably extend its decline against the dollar as it approaches an intersection with an area of support. The Pound fell against the dollar as U.K. home sellers lowered asking prices in June for the first time in five months and stock-market losses sapped demand for riskier assets priced in sterling.

Technical View:

EURO chart pattern holds on its bear note to take support at 1.3790 levels break of which will have further bearish momentum towards 1.3730. Currency is expected to trade in the range of 1.3790 -1.3930 levels. Currency is trading below the moving averages confirming the bear note. Stochastic is also trending down.

GBP chart pattern points a sideways to bearish move. Trading range for the day is expected to be between 1.6200-1.6450 levels for the day. Stochastic and the Relative strength index are seen trending down currency is trapped in triangle area. A breakdown from the triangle should trigger further bearish momentum targeting 1.6180 area and Break above that should trigger further bullish momentum back towards 1.6505/59 area..

Rupee had a higher open racking weaker stocks-Jun 23.

2009-06-23T00:45:00.000-07:00

Rupee reached a five-week low as local shares fell following the lead from Asian stocks, triggering concerns of foreign fund outflows. US Dollar strength looks to be gaining momentum of major forex currencies as the greenback again becomes attractive as a safety play amid reversing stock and commodity markets.

Technical Outlook:

USDINR chart pattern gave a higher open and is expected to resume its bullishness and test the resistance level of 48.97 and as the market is seen trading in the overbought areas it is expected to give a downward consolidation after the Europe open to 48.66 levels next support for the currency is seen at 48.40.Chart pattern is expected to have a doji formation for the day .

Evening Report-Jun 22

2009-06-22T04:52:00.001-07:00

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.

Evening Report-Jun 19.

2009-06-19T05:08:00.000-07:00

Rupee edged a little lower as the domestic shares pared earlier gains but the weakness in the dollar versus major currencies helped prevent a further fall. The U.S. dollar continued to lose ground during the overnight following the rebound in risk appetite, and the greenback may trend lower over the next few hours of trade as the equity futures foreshadows a higher open for the U.S. market. The advance in global equities is likely to fuel demands for higher risk/reward investments, and the lack of event risk coming from the economic docket could leave the greenback at the mercy of risk trends. The Euro failed to break above 1.3950 with the single-currency tipping lower throughout the European trade to hold near 1.3910 due to lack of momentum to retrace the decline from earlier this week may keep the pair within a tight range over the remainder of the trading session. Meanwhile, the economic docket continued to reinforce a weakening outlook for the region, with German producer prices falling to a 22-year low in May from the previous year. Producer prices in Germany held flat with the annualized rate falling 3.6% from the previous year, driven by a 47.4% drop in heating oil, while excluding energy costs, prices slipped 2.5% from a year earlier. Meanwhile, EU policymakers said that the economy is well on track for ‘sustainable’ recovery,’ and went onto say that ‘further budgetary stimulus would not be warranted.’ The group also called for a ‘creditable exit strategy’ in order to stem the long-term risks for inflation, while they pledged to support the banking industry as financial conditions remain challenging. Nevertheless, as ECB expects economic activity to stabilize later in the year, hopes of a marked recovery may continue to drive the single-currency higher as the central bank puts a floor on the exchange rate. British pound advanced to a high of 1.6451 on the back of U.S. dollar weakness , and the pair may continue to push higher as investors hold long-term expectations for higher interest rates in the U.K. Meanwhile, BoE Governor said that there have been signs that the downturn in the economy was leveling off, but warned ‘strong conclusions’ should not be drawn as he expects economic confidence to ‘take a lot longer to recover.’ The comments suggests that the outlook for future growth remains uncertain as the region faces its worst recession in over half a century, and the rise in commodity prices may continue to take a toll on the real economy has consumers face a weakening labor market paired with the downturn in the housing market .Japaneses Yen remained bullish and was seen at 96.80 levels.

Evening Report-Jun 18.

2009-06-18T04:42:00.000-07:00

Rupee closed at 48.21 levels for the day and faced a resistance at 48.32 levels. India's inflation rate for the week entered into negative territory for the first time giving ample scope for the government to allot more funds in the next month's Budget to boost economic growth. India's Advance Tax Collection also Rises During Apr- Jun Period. After earlier losses the dollar has regained its footing and is benefiting from increased risk aversion on the back of weak U.K. consumption figures. We may see continued greenback support as markets start to come to the reality that any recovery will be prolonged and challenging. On the US economic docket we will see focus on the upcoming initial jobless claims figures as traders look for signs that the labor market is improving. Forecasts are for new filings to remain level at 602k after 601k the month prior as the pace of layoffs has slowed. A drop below the 600K level could spark an improvement in risk sentiment and weigh on the dollar. Additionally, the Philadelphia Fed manufacturing reading is forecasted to improve to -17.0 from -22.6 which would be the highest since September, 2008. The Euro has seen see saw price action during European trading as bullish sentiment is being challenged by declining equity markets. The Italian trade balance was the only fundamental release which showed a deficit of 277 billion euros after a surplus of 69 billion the month prior as exports sharply fell. Despite, signs of stabilization in the economic union there are several countries that are still facing considerable challenges. Indeed, the German economic Ministry June report stated that the contraction is weaker than previously and expects a bottoming by the end of 2009 but downside risk remain high. The Pound sunk nearly 100 pips immediately after the disappointing release of U.K. May retail sales which unexpectedly fell by 0.6%. Early forecasts were looking for a 0.3% gain which would have been a third straight month of improvement, but months of job losses made it difficult for Britons to sustain the level of demand. However, public sector net borrowing rose to £19.8 billion which was the highest since record keeping began in 1993 and a sign credit markets are thawing. A reversal in consumption at non-food and non-specialized stores which fell by -1.4% and -1.8%, signals that Britons have reigned in non-discretionary spending. Signs of stabilization in the economy had led to gains the past two months but now that the built up demand has been exhausted, future purchases will come under scrutiny. Meanwhile calls for spending to be curbed by Chancellor of the Exchequer Alistair Darling will put added pressure on Prime Minister Gordon Brown as the government continues to increase its debt in an attempt to spur an economic recovery. Also BoE Governor King speaking today said that although that there a signs of a recovery, it is too soon to reverse stimulus and liquidity measures but the time has come to plan an exit strategy. Japanese Yen remained under downside pressure and was capped below 96 zone.

Evening Report-Jun 17.

2009-06-17T05:01:00.000-07:00

Indian rupee remained lower against the US dollar and closed at 48.14 levels based on the dollar's gains versus the majors .Local stock market fell 3.2 percent as renewed worries about the world economy weighed on markets across Asia and Europe. Dollar started to regain some support as concerns over the type of recovery for the global economy has reignited a move toward safety. U.S. consumer prices are forecasted to decline by 0.9% from a year ago as oil prices are lower by 50% despite their recent rise. An inline print will ease some of the recent concerns that the upside risks of inflation are increasing as the central bank continues to print money. Fears are growing that the Fed may need to start tightening monetary policy sooner than their projection of mid 2010 which could limit the scope of a recovery. Either the prospect of rising interest rates or a slower recovery could generate bullish dollar sentiment. However an inline print will confirm that current policy is appropriate and will lower interest rate expectations which could send the dollar lower. The Euro saw a similar reversal as sterling after reaching as high as 1.3926 as it was also a victim of global growth concerns. A rise in construction activity for a second month by 0.6% in April added to the signs that the economy is stabilizing. Meanwhile the trade balance for April saw its surplus increase to 2.7B from 1.8B, despite expectations for a deficit of 1.5B. The decline in imports outpaced a slowdown in exports as local demand remains weak. The region may start to see a pickup in demand for its products as global demand improves but domestic growth may be slow to recover which could limit the scope of a possible recovery. The Pound has started to trade heavy after reaching as high as 1.6483 despite a slower pace of job losses and an improving outlook from the BoE. Indeed. the U.K. economy lost 39,300 jobs in May which was far less than the 60,000 that was expected. The minutes from the last policy meeting of the BoE showed that they are becoming optimistic that a recovery is imminent. The central bank points to signs that the housing market is stabilizing and a slowing of the decline in consumer consumption. The slower pace of job losses will also help lead to a recovery in domestic growth and without the threat of falling home prices we could see the U.K. economy take steps toward a recovery. However, there remain concerns over the amount of debt that the government has issued to help finance the stimulus package and bailout of financial institutions. The expectations of higher taxation going forward will limit the upside for the economy and may cap the pound’s potential appreciation. BoE governor King and Chancellor Alistair Darling will make their Mansion House speeches and if we hear talk of an exit strategy from their quantitative easing efforts, then it could add on to bullish sentiment in sterling. Yen may strengthen against higher-yielding currencies as the Standard & Poor’s 500 Index fell. Currency gained as the greenback remained under pressure as the official of BRIC economies ponder over its status as a reserve currency.

Evening Report-Jun 16

2009-06-16T04:47:00.001-07:00

The Indian rupee was largely steady in afternoon trade and closed at 47.74 as a choppy sharemarket failed to provide clarity on fund flows, but a weaker dollar overseas supported sentiment for the local unit.Greenback The dollar fell broadly on Tuesday after traders took comments from Russia that the world needs new reserve currencies as a signal that it may be looking to cut the share of U.S. assets in its currency portfolio. The Dollar has given back some of its gains as the outlook for the global economy received a boost from the BoJ and there was more talk of replacing the dollar as the world reserve. Russian President Dmitry Medvedev's reiterated previous rhetoric from the country that an alternative needs to be developed to the greenback, reversing comments from the country’s Finance Minister yesterday. The remarks came ahead of the BRIC conference where it is expected that the emerging market economies will discus diversifying away from the dollar. The economic docket may add to dollar weakness as producer prices are forecasted to fall by 4.4% after a 3.7% drop in April. Lower inflation pressure will allow the Fed to continue its quantitative easing measures and leave rates near zero. Yet, there has been talk that the central bank will need to start tightening to avoid future inflation risks, so a slower rate of decline than expected could spark bullish greenback sentiment. Also scheduled for release are housing starts which are forecasted to rise to 485,000 from 458,000 which could fuel risk appetite and add to the bearish dollar momentum. The Euro reached as high as 1.3930 as a jump in German investor sentiment rose to a three year high of 44.8 adding to the improving global outlook. Signs that the region’s economy is stabilizing lead to sentiment rising from 31.1 and exceed forecasts of 35.0. Meanwhile, Euro-zone CPI fell to 0.0% as the contraction in the economy and the prior drop in energy costs continue to put downward pressure on prices. However rising energy costs and the economy stabilizing have eased deflation fears which have allowed the ECB to bring their benchmark rate to a record low of 1.00%. Despite the Euro ‘s gains against the dollar it has fallen to its lowest level since December, 2008 against the pound at 0.8439 as there is still lingering concerns over the capitalization of the region’s banks and their lack of transparency. The Pound rose to as high as 1.6483 as it reversed earlier losses on an improving global outlook and a slower pace of decline for inflation. Indeed, U.K. CPI fell to 2.2% from 2.3% but missed expectations of 2.0% which is the BoE’s target level. The central bank has forecasted that inflation will fall below their desired level and remain there until 2010. However, improving global and domestic economies have started to raise inflation concerns and may limit the scope of future quantitative easing efforts from the central bank and the interest rate outlook. Japanaese Yen gained and was seen at 96.90 levels as BoJ left their benchmark rate at 0.10% and in a statement said that "Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening." The central banks raised its outlook for the economy for a second month which sent the Yen soaring 190 pips against the dollar to a low of 96.07. Despite, the improved outlook, BoJ Governor Masaaki Shirakawa said that there was no guarantee that a recovery could be sustained.

Yen Advances as Stock Losses Increase Demand for Safety Assets -Jun 16.

2009-06-15T22:53:00.000-07:00

Japanese Yen initially found support from USD strength until mounting stock market losses forced the pair back below 98 Yen. Crosses were under severe pressure with AUD/JPY falling from 80 to 77.5 Yen. Looking ahead for BOJ minutes released Tuesday. chart is expected to have a bearish correction for the day . With the trading range between 96.40- 97.40 levels. Stochastic and Relative strength index are seen trending down giving bearish crossovers .Currency is trading on the moving averages break below it will confirm the trend. Good resistance at 97.80 levels and support is seen at 96.20 levels.

Euro and Sterling could not stand USD strength-Jun 16.

2009-06-15T22:46:00.000-07:00

Euro continued with Friday’s theme of a slow trend lower. The Pair fell from 1.4000 to test support at 1.3790 before bouncing off 1.3750. Numerous negative Euro stories flooded the market yesterday which combined with stock weakness for a substantial move. Looking ahead for German Zew Survey(Economic Sentiment) for June forecast to rise to 35 from 31 previously. Sterling held up better than most but succumbed to USD strength. EUR/GBP broke through 0.8500 and supported during the day. A CBI report expects the UK economy to not rebound until 2010 and that expansion of the Quantitative easing program will be required. Looking ahead for May CPI is forecast at 0.3% vs. 0.2% previously.

Technical view:

EURO chart pattern shows a bearish note for the day. Currency is expected to trade in the range of 1.3720-1.3970 levels. Momentum is seen trending down and Parabolic is holding on the bear note and Euro is trading below the moving average confirming the outlook..Good support is seen at 1.3670 and break of which will see 1.3420 levels in near term and key resistance is seen at1.4020 levels.

GBP chart pattern points towards a sideways to bearish note and trade in the range of 1.6150-1.6380 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down Currency is giving downward consolidation after testing the upper bollingers hinting towards downward correction to 1.5950 .Key resistance for the currency is seen at 1.6430 levels. Caution is given by parabolic as is is pointing towards bull note.

Rupee weakend with weaker Asian shares -Jun 16.

2009-06-15T22:44:00.000-07:00

The Indian rupee held close to three-week lows with weaker Asian shares weighing on sentiment, but the dollar's losses versus major currencies helped prevent a further sharp drop. U.S. Dollar enjoyed gains all day as the Euro led the majors lower. Oil came off 2% along with Gold and Copper. Stocks were also hit hard by profit taking and helped stoke safe haven buying. TIC long term purchases fell to $11Bn in April. Crude Oil closed down $1.43 to finish the day at $70.61.. Looking ahead, May Housing Starts are forecast at 0.49M vs. 0.45M previously.

Technical View:

USDINR chart pattern shows a bullish note for the day. With the trading range between 47.55-48.00 levels for the day. Good support is seen at 47.42 levels and key resistance is seen at 48.10 levels. Currency is expected to have a downward correction and test moving average level as support. Stochastic is trending down from overbought areas hinting towards small downside correction.

Evening Report -Jun 15.

2009-06-15T04:46:00.001-07:00

Rupee stayed week and closed at 47.72 in tandem with the domestic share market .The dollar's gains against major currencies overseas also weighing on sentiment.The dollar was well bid after the supportive comments from Russian finance minister, but we are starting to see gains become harder to come by in recent activity. Manufacturing in the New York area is expected to have weakened to -4.80 from -4.55 after consecutive months of significant improvement which could add to current risk aversion and dollar support. U.S. Dow futures are lower by triple digits which is a strong sign that we may see equities trade lower which could add to bullish dollar sentiment. Meanwhile turmoil in Iran has raised geopolitical concerns which could also send traders looking for the safe-haven of the greenback. The Euro sunk after Russian Finance minister Alexei Kudrin confirmed that the dollar had no rival as the world reserve at the moment. The comments came in the midst of the G-8 meeting and calmed fears that this week’s BRIC summit would see calls for finding an alternative to the dollar. The summit of global leaders also saw questions raised regarding the European banking system which is also helping weigh on the euro. The unwillingness of governments to provide bank stress test similar to the U.S. has left many wondering if they have enough capital to meet the challenges ahead. Meanwhile, Euro-zone 1Q unemployment fell by 0.8% which was the biggest quarterly drop on record and may add to the single currency’s weakness. Markets started to hedge their bets that the Euro would be seen as a substitute for the dollar as a reserve currency which helped spur some of the recent greenback weakness. Russia has been the biggest proponent of removing the dollar of its world reserve status and now that it has confirmed its dominance we could see more reversal of flows as we head into the U.S. session.After being caught up in the Euro weakness the pound has started to regain its footing. Markets continue to see sterling weakness as equity markets are trading lower across the globe and the risk aversion could be a weighing factor throughout the day. There weren’t any fundamental release to influence price action which will leave it at the mercy of the broader themes. However this won’t be the case for the remainder of the week as CPI, BoE minutes and retail sales line the economic docket. The G-8 meeting showed that policy makers are starting to become concerned with the longer –term effects of the amount of liquidity that is being pumped into financial systems. The sterling could find support as the BoE was one of the first to take aggressive steps to infuse markets with needed funds and may lead the charge to undo its effects. However, the Confederation of British Industry said that the central bank may need to print more money in order to ensure a recovery as they see growth flattening after a brief recovery. Japanese Yen picked up bullish momemtum and stayed above 98 levels ,Currency faced strong resistance at 98.60 levels.

Euro and pound bulls are hammered-Jun 15.

2009-06-15T00:19:00.000-07:00

Euro was very soft against the USD as the market hammered the Euro on the subject of reserve status. As the second biggest currency any talk of moves away from the Dollar standard will help the single currency advance. Russia and Japan both talked up the USD .Looking ahead for Q1 Employment change Q/Q previously at -0.3%. Sterling weakened from the 1.6500 level as GBP/JPY ran out of steam. The Blackrock $6bn purchase of Barclay’s global investment unit has been supporting the pound in recent trading sessions. EUR/GBP tested 0.8500 but couldn’t press further.

Technical View:

EURO chart pattern is expected to be on a bearish note for the day. Currency is expected to trade in the range of 1.3860-1.4070 levels. Momentum is seen trending down and Parabolic is holding on the bear note and Euro is trading below the moving average confirming the outlook..Good support is seen at 1.3820 and key resistance is seen at1.4120 levels.

GBP chart pattern shows a bearish note and trade in the range of 1.6230-1.6480 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards downward correction to 1.6180 .Key resistance for the currency is seen at 1.6520 levels. Caution is given by parabolic as is is pointing towards bull note.

Rupee weakens on Asian cues-Jun 15.

2009-06-15T00:17:00.000-07:00

The Rupee depreciated against the dollar taking cue from weak Asian currencies and expectations of capital outflow by foreign funds in the domestic equities which opened on a negative note. U.S. Dollar the market took the cue of global Finance ministers who talked up the dollar on Friday and prompted profit taking form Oil to Gold. Crude Oil closed down $0.64 to finish the day at $72.04. US Consumer Confidence continues to edge higher up to 69 in June vs. 68.7 previously. Looking ahead for April Capital Net flows previously at 55.8bn.

Technical view:
USDINR chart pattern shows a bullish note for the day. With the trading range between 47.55-47.95 levels for the day. Good support is seen at 47.42 levels and key resistance is seen at 48.05 levels. Currency is expected to test the resistance level and turn down to moving average levels as Stochastic is trending up but seen in overbought areas hinting towards small downside correction and the currency is seen trading above the moving average.

Evening Report-Jun 12.

2009-06-12T04:36:00.000-07:00

The Rupee has surged and closed at 47.59 as cash floods into India as investors turn optimistic on the global outlook but as authorities are trying to temper the rise so it does not disrupt an emerging economic pick-up. The Dollar has been well bid through overnight trading across the board as Japanese Finance Minister Kaoru Yosano said his nation’s confidence in U.S. debt is "unshakable" and that the currency’s global status is safe. Despite rhetoric from countries such as Russia calling for the end of the dollar as the world reserve, the safety and liquidity of U.S. Treasuries will make it difficult for them to find an adequate substitute at this time. It will take a conscious global effort to achieve this and given the rate that initiatives of that magnitude take, it could be sometime before we see a suitable alternative developed. Meanwhile, the University of Michigan consumer confidence survey will provide the only significant event risk for the day as it is forecasted to improve to 69.5 from 68.7 which would be the highest since last September. It has been rising optimism which has bolstered demand for risky assets and another uptick in consumer sentiment should add to the theme. Therefore, we could see greenback weakness on the pick up in risk appetite as traders look to buy assets that will benefit from an increase in domestic demand . However, we must continue to monitor that relationship as we go forward and be aware that positive fundamental data will begin to generate bullish dollar price action. The Euro traded heavy throughout overnight trading reaching as low as weak fundamental data add to a pull back in risk appetite. Indeed, industrial production for the Euro-zone fell by 1.9% in April which was far greater than the -0.4% which was expected. The monthly decline dragged the annualized rate to -21.6% which was the most on record. Meanwhile, prices continue to fall in the region as French CPI turned negative for the first time since record keeping began in 1996 with a -0.3% Y/Y reading. The German wholesale price index added to the story as it dropped by 8.9% which was the most in 22 years. The ECB has forecasted that inflation will turn negative for the region over the coming months but will start to move back toward its 2% target by the end of the year. A look at the breakdown for the region’s output shows that a 4.0% reduction in energy led the decline followed by a 2.7% fall in capital goods. We could see the energy numbers reverse as rising oi prices will begin to inspire producers to take advantage of potential rising profits. However, the drop in capital goods will weigh on any hopes for a rapid recovery for the economic union. Also, a 26.7% reduction in durable consumer goods on a yearly basis underlines the depth of the retrenchment by consumers and we may not see prior levels of consumption return for sometime. Sterling has started to see some profit taking after reaching as high as 1.6600as bulls recognizing the broader dollar strength gave up the fight for the time being. BoE committee member Paul Fisher acknowledged that the U.K. is seeing signs of recovery but policymakers shouldn’t become complacent as there are likely to be bumps in the road ahead, with many twists and turns. Nevertheless, the quantitative easing measures by the government continued to boost liquidity in the markets which is helping the housing sector recover and leading to a pick up ion output. Greenback strengthened in early dealings versus the Japanese Yen and hit as high as 98.28 as industrial production grew 5.9% month-on-month in April, revised up from the preliminary estimate of 5.2%. On a yearly basis, production plunged 30.7% in April. Japan's consumer confidence improved to 36.3 in May from 33.2 logged in the previous month.

Pound advanced compared to Euro-Jun 12.

2009-06-11T23:57:00.000-07:00

Euro broke above 1.4200 during the US session after bouts of USD strength earlier in the day. Heavy EUR/JPY buying helped to support the major higher. Looking ahead, April Industrial Production is forecast at -0.4% vs. -2% previously.Sterling rallied with the higher stocks/Oil theme. The pair managed to break above 1.6600 before consolidating for the rest of the day.

Technical Outlook:

EURO chart pattern is expected to be on a bearish note for the day. Currency is expected to trade in the range of 1.3980-1.4170 levels. Momentum is seen trending down and Parabolic is holding on the bear note and Euro is trading on the moving average only break on either sides will confirm the outlook..Good support is seen at 1.3950 break of which will see 1.3880 and key resistance is seen at1.4220 levels.

GBP chart pattern shows sideways to bearish note and trade in the range of 1.6430-1.6650 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards upward correction to 1.6680 .Key support for the currency is seen at 1.6350 and 1.6280 levels. Caution is given by parabolic as is is pointing towards bull note.

Indian rupee edged higher -Jun 12.

2009-06-11T23:55:00.000-07:00

Indian rupee edged higher following gains in other Asian currencies. U.S. Dollar came under pressure across the board as a jump in shares helped increase risk appetite. May Retail Sales rose 0.5% vs. 0.6% forecast. Commodities also rallied with Oil jumping to $73 a barrel after the IEA raised its world Oil demand forecast. Weekly jobless claims fell 24k to 601k this week. Crude Oil closed up $11.35 to finish the day at $72.68.Looking ahead, G8 Finance minister meet over the weekend.

Technical Outlook:

USDINR chart pattern shows sideways to bullish note for the day. With the trading range between 47.30-47.75 levels for the day. Good support is seen at 47.25 levels and key resistance is seen at 47.82 levels. Currency is expected to test the resistance level and turn down to lower band levels as Stochastic is trending down hinting towards small downside correction and the currency is seen trading on the moving averages giving a sideways outlook.

Evening Report-Jun 11.

2009-06-11T05:05:00.000-07:00

Indian rupee extended its downtrend against the dollar and closed at 47.61 levels , the India's annual rate of inflation rose to 0.13% Stock market ended a volatile session modestly lower.The dollar has given back its recent gains against most the major currencies as improving fundamentals across the globe has spurred hope that the broader economy has stabilized. The upcoming advance U.S. retail sales report is expected to keep the theme going as consumption is forecasted to rise by 0.5% in May. The U.S. consumer confidence indicator jumped the most in six years to 54.9 from 40.8 last month as rising equity markets and stabilizing house prices have eased fears which should support an increase in demand. Markets will be looking to see what the reaction will be from the greenback on the positive fundamental data. Additionally initial jobless claims are forecasted to fall to 615,000 from 621,000 but a sharper drop would reinforce the U.S. labor report and could add to rising optimism. An auction of 30 year U.S. treasury bonds may add support for the dollar today and should be factored into strategies for today. Concerns are rising that increasing yields could start to derail the potential recovery.The Euro has remained choppy through overnight trading and the ECB’s monthly bulletin didn’t help generate any conviction for either direction. The Central Bank said the Euro-zone economy will start growing again by the middle of next year and inflation will pick up after temporarily dipping into negative territory this summer, which was nothing that they haven’t already stated. Meanwhile, French non-farm payrolls showed further deterioration in the labor market as its initial reading for the first quarter was revised lower to -1.2% from -0.9%. The weak labor data only supports the arguments that growth will not return to the area until next year. The sterling continued to find support reaching as high as 1.6490 after a BoE survey showed that consumer expectations for inflation rose to 2.4% from 2.1% for the next 12 months. Additionally, the NIESR GDP estimate showed that the rate of contraction for the economy has slowed in the three months ending in May to -0.9% from -1.5% in the period ending in April. The stabilizing economy and rising commodity prices have fueled expectations for rising costs and ultimately higher interest rates from the central bank. The major central banks expressed when they embarked on their monetary easing policies that the risk of future inflation would leave them ready to reverse their actions and look to remove liquidity from the markets. Policy makers are concerned that the risks of future bubbles exist, if they don’t manage the process in a timely manner. Therefore, we are starting to see interest rate expectations rise in the U.S. and U.K. as evidence mounts that growth is around the corner. Therefore, rhetoric from policy makers will start to have a greater impact on price action and bears watching as we go forward. Yet, we don’t expect any change in policy until we start to see concrete signs of growth which may not come until early 2010.Japanese yen edged down earlier in Asian deals after a report showed that Japan's economy shrank in the first quarter at its fastest pace since World War Two.The gross domestic product in Japan contracted by 3.8 percent in the first quarter compared to the previous three months.Japanese yen bounced back in European trade to 98.26 levels.

Japanese yen higher against dollar-Jun11.

2009-06-10T22:38:00.000-07:00

Japanese Yen weakened through the USD/JPY which rallied off support at 97 Yen to break back above 98. Crosses were mixed with year highs in AUD/JPY leading to profit taking in the US session. Japan Q1 GDP at -3.8% vs. -4.0% forecast. chart is expected to have a bearish correction for the day . With the trading range between 97.20- 98.40 levels. Stochastic and Relative strength index are seen trending down giving bearish crossovers . currency is trading below moving averages. Good resistance at 98.60 levels and support is seen at 96.80 levels.

Euro paused below 1.4100 levels but pound saw a bull rally-Jun 11.

2009-06-10T22:34:00.000-07:00

Euro tried to rally as the Nikkei surged towards 10000. Sluggish US stocks and a Financial Times article on European banks hurt sentiment and the pair slipped below 1.4000. Sterling rallied aggressively in European session on better than expected manufacturing and Industrial production figures in April. April Trade Balance at -7.0Bn vs. -6.4Bn forecast.

Technical Outlook:

EURO chart pattern is expected to be on a bullish note for the day. Currency is expected to trade in the range of 1.3920-1.4130 levels. Momentum is seen trending down and Parabolic is holding on the bear note but stochastic is pointing up and Euro is trading between the fast and slow moving average giving a sideways outlook .Good support is seen at 1.3880 and key resistance is seen at1.4180 levels .

GBP chart pattern is expected to form a bullish pattern and trade in the range of 1.6320-1.6520 levels for the day. Momentum is seen trending up and the Relative strength index is also trending up hinting towards upward correction to 1.6550 .Key support for the currency is seen at 1.6280 levels. Caution is given by parabolic as it is holding on to its bear note.

Indian Rupee weakened on global cues-Jun 11.

2009-06-10T22:25:00.000-07:00

The Indian rupee weakened mirroring losses in other regional peers and weighed by rising oil prices and choppy local shares. U.S. Dollar managed to end slightly higher after rebounding off lows set in the European session. A good US treasury Auction helped the USD gain for the rest of the day. US stocks couldn’t manage the optimism seen in Asia and Europe although higher Oil continues to support mining stocks. April‘s Trade Balance came in at expectations of -29.2B. Looking ahead for Retail Sales are forecast at 0.5% vs. -0.4% previously.

Technical Outlook:

USDINR chart pattern shows sideways to bullish note for the day. With the trading range between 47.20-47.60 levels for the day. Good support is seen at 47.18 levels and key resistance is seen at 47.65 levels. Stochastic is trending up giving bullish signal but the currency is seen trading on the moving averages giving a sideways outlook.

Evening Report-Jun 10.

2009-06-10T04:50:00.000-07:00

Indian Rupee was largely steady rising for the second straight day, as a firm stock market renewed hopes for more inflows and the dollar's weakness versus majors also supported.The dollar continues to be on the run as demand for equities and commodities continue to plague the greenback. Event risk today will come in the form of the trade balance, monthly budget statement and the Fed Beige book report. The U.S. trade deficit is expected to widen to $29.0 billion from $27.6 billion as consumer demand starts to improve as the economy stabilizes. Meanwhile, traders will be closely watching to see if government spending is on a decline after the Obama administration has pledged significant cost cutting in an attempt the trim the deficit in half by the end of the President’s term. Fears are growing that if the government cuts spending drastically it may slow the recovery process for the economy. The biggest threat to the dollar may come from the Fed Beige book as the forward looking indicator will show how the 12 federal districts are performing and the expectations for the various regions. It typically generates a reaction from equity markets which could impact dollar price action. The Euro has also come under pressure after reaching as high as 1.4143 during overnight trading as we have started to see some profit taking. There was mixed data from the Euro-zone as French industrial production unexpectedly fell by 1.4% versus expectations if a 0.2% gain. Growth remains a challenge for the country as the Euro-zone finds itself in the worst recession since WWII. Meanwhile, Italian output rose by 1.1% which was more than the 0.8% that economists forecasted and the highest in a year. However, it ended 11 straight months of contraction. Indeed, growth figures for the country showed that the economy contracted by 2.6% in the first quarter as global demand has shrunk for Italian goods. The Pound has started to give back some of its gains after reaching as high as 1.6443 following the release of the U.K. trade balance report and manufacturing numbers. Output in the U.K. rose for a second month by 0.3% as demand for automobiles grew on the back of easing credit markets. Meanwhile, the visible trade balance widened to -£7000 from -£6589 as rising imports outpaced a slight increase in exports. The lack of an improvement in demand for British goods considering the improvement in global conditions may be a concern for traders and adding weight to the sterling. It is clear that forex traders are looking past the political turmoil in the country and focusing on the improving fundamentals which continued with the growth in manufacturing output in April. The mining and oil sectors saw 2.4% and 2.5% gains during the month as rising commodity prices have spurred the increase in activity. Indeed, oil has risen back above $70 bbl which has helped pushed energy equities higher and the increase in risk appetite has been a driver of bullish cable price action. However the expectations of rising gas prices will dim outlook for consumer spending and could slow the pace of a global recovery. Japanese Yen weakend against the major and took resistance at 98.13 levels

Yen strengthened against the USD -Jun10.

2009-06-09T22:45:00.000-07:00

Japanese Yen strengthened against the USD as Yields dropped on the above news. Support at 98 gave weigh but crosses continued to provide support on dips so the downside may be limited while risk appetite is strong. Core Machinery Orders fell -5.4% vs. 0.1% forecast.Chart is expected to have a bearish correction for the day . With the trading range between 96.80- 98.20 levels. Stochastic and Relative strength index are seen trending down giving bearish crossovers . currency is trading between the fast and slow moving averages. Good resistance at 98.40 levels and support is seen at 96.50 levels.

Euro and Pound continued the bull rally-Jun 10.

2009-06-09T22:42:00.000-07:00

Euro regained above 1.4000 after Goldman Sachs put out a buy recommendation and the USD weakened after traders pared back bets of the US Fed raising rates this year. German Industrial Production was down -1.9% in April vs. 0.0% forecast. Looking ahead, May German CPI is forecast at -0.1%. Sterling continued the rally that began yesterday on route back above 1.6300 towards year highs above 1.66. Better than expected RICS house price balance helped propel the pair with gains above 1% for the day. Industrial Output is forecast at -0.1% vs. 0.0%. Also released, April Trade balance is forecast at -6.4Bn vs. -6.59Bn.

Technical Outlook:

EURO chart pattern is expected to be on a bullish note for the day. Currency is expected to trade in the range of 1.3950-1.4180 levels. Daily Momentum and stochastic are seen trending up and Euro is trading above the moving average giving a bullish outlook but Parabolic is still holding on the bear note. Good support is seen at 1.3920 break of which will see 1.3850 and key resistance is seen at1.4220 levels .

GBP chart pattern is expected to form a bullish pattern and trade in the range of 1.6130-1.6430 levels for the day. Momentum is seen trending up and the Relative strength index is also trending up hinting towards upward correction to 1.6450 .Key support for the currency is seen at 1.6080 levels.

Indian rupee up on hopes of improving risk appetite-Jun 10.

2009-06-09T22:39:00.000-07:00

The Indian rupee rose for a second straight day as hopes for financial reforms in the budget in early July raised expectations foreigners would continue to bring in more capital. U.S. Dollar resumed weakening after a brief period of strengthening as speculation of future rate hikes in the US were dampened. In a survey of the major US bond traders all 16/16 thought the US would not raise rates this year. USD/JPY was lower even as stocks rallied on banking and mining stocks. Oil broke and closed above $70 a barrel. Crude Oil closed up $1.92 to finish the day at $70.01.Looking ahead, April Trade Balance forecast at -29BN vs. -28Bn previously.

Technical outlook:

USDINR is expected to trade in a bearish note for the day. With the trading range between 46.98-47.40 levels for the day. Good support is seen at 47.90 levels and key resistance is seen at 47.45 levels. Stochastic is trending down giving bearish crossovers and the currency is seen trading below the moving averages confirming the bear note.

Asian Market Summary-Jun 09.

2009-06-09T04:53:00.001-07:00

The Indian rupee rose due to 3 percent rise in domestic shares which fuelled hopes for foreign fund inflows with the dollar's weakness against major currencies also boosting sentiment .U.S. dollar started to come under pressure as risk appetite has begun to pick up during European trading, a signal that greenback flows are still being driven by risks winds. A light economic docket will leave price action to the broader themes as wholesale inventories and two minor sentiment readings are on tap. The 1.1% drop in wholesale inventories shows that producers are remaining lean as a stabilizing economy hasn’t translated into a pick up in demand. However a pick up in retail sales could take the view that demand has helped dry up reserves which would add to the case that a recovery is under way. U.S. equity futures have turned negative, a sign that risk aversion is returning which could bring dollar support. Euro has started to turn lower after reaching as high as 1.3968 during overnight trading despite the German trade balance showing a significant drop in exports. Europe’s largest economy saw a 4.8% decline in demand for its products in April which erased a brief pick up in March. However, a 5.8% drop in imports led to a trade surplus of 9.4 billion which beat expectations of 9.3 billion. Meanwhile, German industrial production fell by 1.9% in April versus expectations of a 0.3% gain which has added to heavy Euro trading. The ECB’s Likanen was on the wires today cautioning of becoming too optimistic as any recovery for the global market will be slow. He also signaled that the central bank hasn’t put in a floor on interest rates which will add to speculation that more easing could be ahead. The central bank has been reluctant to cut rates below 1.00% and the fact that they are considering such a move may be a sign that downside risk remain for the economy. Pound looked to shake off political turmoil in the U.K. as signs that the housing sector is improving helped bring forex traders focus back to improving fundamentals and send the GBP/USD to as high as 1.6180. Indeed, the RICS house improved from -58.7% to -44.1% which was the highest reading since November, 2007. An improvement in the DCLG house price indicator from -13.6% to -13% bolstered the case that the sector is stabilizing which had been mired in its worst downturn since the Great Depression. However, BoE’s deputy governor for financial stability Paul Tucker warned that the medium term outlook for the economy remains uncertain took the steam out of Sterling bulls .The MPC announced that it was considering extending its asset purchase program to commercial paper which will help provide additional liquidity to the market. Last month’s improvement in mortgage approvals was a sign that the central bank’s efforts to spur lending are starting to gain traction and if the housing sector can begin to show stronger signs of improvement then we may see consumer optimism grow. Prime Minister Gordon Brown has regain control of the Labour party which may put an end to the political concerns which sunk sterling to end last week. Therefore, if markets continue to focus on improving fundamentals for the country then sterling bullish sentiment may return. Dollar fell against the yen to 98.55 due to selling by Japanese exporters..

Asian Market summary-Jun 09.

2009-06-09T04:52:00.001-07:00

Euro and Pound shed some of their gains-Jun 09.

2009-06-09T04:50:00.000-07:00

Euro sank to fresh week lows after Ireland was downgraded and Latvia was put on negative watch due to a currency devaluation risk. The bounce off lows was limited as the EUR/GBP came under pressure. German Industrial Orders were flat in April. Looking ahead, German April Industrial Output is forecast at 0.1% vs. 0.0% previously. Japanese Yen came under fairly heavy profit taking in the Asian morning before more USD buying emerge in Europe and help to keep EUR/JPY in a tight range. Crosses were mostly negative as their respective majors fell but most are still seeing the move lower as corrective. Sterling continued to be sold as another day of political uncertainty began in the UK. Support at 1.5800 held firm and support from EUR/GBP selling helped cable get back above 1.6000. Supporting the rebound was improvement in banking stocks and talks of Barclays selling its Investment Unit to Blackrock. BRC Retail Sales at -0.8% vs. 4.6% previously.

Tech outlook:
EURO chart pattern is expected to be on a bearish note for the day. Currency is expected to trade in the range of 1.3750-1.3960 levels. Daily Momentum and stochastic are seen trending down and Euro is trading below the moving average and Parabolic is holding its bearish outlook. Good support is seen at 1.3720 break of which will see 1.3380 and key resistance is seen at1.4020 levels .

GBP chart pattern is expected to form a bearish pattern and trade in the range of 1.5790-1.6100 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards the possibility of downside correction to 1.5750 .Key resistance for the currency is seen at 1.6150 levels.

Rupee opened on a weaker note in early trade-Jun 09.

2009-06-09T04:48:00.000-07:00

The Rupee stayed close to 2-week lows as losses in other regional share markets raised worries foreigners could withdraw funds from local stocks. U.S. Dollar continued where it left off on Friday and gained heavily against most currencies. Stocks were mixed, as were metals with Oil bouncy but copper struggling under heaving profit taking. Markets were quieter than usual with Australia away during the Asian session. Crude Oil finished down -$0.38 at $68.05. Looking ahead for Treasury Sec Geithner to Speak.

Technical analysis

USDINR is expected to trade in a bullish note for the day. With the trading range between 47.30-47.85 levels for the day. Good support is seen at 47.20 levels and key resistance is seen at 47.93 levels. Stochastic is trending up and the currency is seen trading above the moving averages and on the upper bollingers giving a caution signal.

Evening Report-Jun 08.

2009-06-08T04:54:00.000-07:00

The Indian Rupee extended its fall and found support at 47.74 levels in tandem with the dollar's extended rally against major curencies overseas, while losses in the local shares added to the downward pressure.However Indian Unit recovered partially and closed at 47.55 levels for the day. U.S. dollar continues to find support following better than expected Non-farm payroll number which showed that the pace of job losses significantly slowed for the economy. However, we are seeing weak equity markets in Asian and Europe with U.S. futures pointing toward a lower open and the risk aversion could also be adding greenback support. It is still too early to tell whether we are seeing a shift toward positive U.S. fundamentals generating bullish price action or whether risk winds will continue to be the overriding factor in price action. Nevertheless, both scenarios are signaling more dollar strength ahead and which should continue without any fundamental releases on the economic docket to impact sentiment. This week’s Fed Beige book and U.S. retail sales reports will help give us more insight into whether the improving outlook for the U.S. economy will now become a positive force in future dollar sentiment. Euro continues to remain under pressure as it fell to as low as 1.3810 during overnight trading as heavy equity markets, profit taking and concerns over Latvia helped send it lower. The European Sentix investor confidence indicator rising above expectations of -31 to -27 temporarily helped slow the downside momentum as the increasing optimism may be a sign that the Euro-zone economy is reaching a bottom. However, the depth of the Latvian recession and the amount of intervention the government has needed to maintain the peg to the euro has raised concerns in the region which continues to send the EUR/USD lower. Nevertheless, President Trichet following the ECB’s rate hold last week stated, that the committee believes that the worst has passed and that signs of a recovery are emerging. The central bank leader said that interest rates were appropriate for now, which left the door open for another rate cut. Therefore, if we continue to see continued trouble from the emerging economies in the region further easing is still a possibility which could add to bearish Euro sentiment. The biggest threat to the single currency could be the pace of the U.S. recovery which appears to be well ahead of Europe. The Sterling has also broken below its 20-Day SMA as the country’s political turmoil continues to steer forex traders away from the currency. Indeed, last week saw Prime Minster Gordon Brown reshuffle his cabinet in order to try and reestablish loyalty of ministers after several walked out of his government. The move hasn’t helped the Labour party which is running third in the elections and the uncertainty of the political direction of the country continues to be a weighing factor for the currency. . Japanese Yen remained Flat and was seen at 98.55 As Improved Eco Watchers Added to Yen Support

Euro and Pound traded lower-Jun 08.

2009-06-07T22:39:00.000-07:00

Euro bounced off the support area that held the pair since late April. Currency gained 50 pips, being one of the few pairs that moved decisively throughout session. This week the Euro-area calendar is free of top-tier releases, something that may affect the pair's momentum. Pound lost more than 600 pips over the last three days of trading as the market is penalizing the unstable U.K. government. This caused the pound to be the worst performer over the last period.

Technical outlook:

EURO chart pattern is expected to be on a sideways note for the day. Currency is expected to trade in the range of 1.3850-1.4060 levels. Daily Momentum and stochastic are seen trending down and Euro is trading below the moving average only crossover can confirm the trend. Parabolic is holding its bearish outlook. Good support is seen at 1.3820 break of which will see 1.3750 and key resistance is seen at1.4120 levels .

GBP chart pattern is expected to form a bearish crow pattern and trade in the range of 1.5830-1.6020 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards the possibility of downside correction to 1.5750 .Key resistance for the currency is seen at 1.6050 levels.

Rupee weakened on dollar selling- jun 08.

2009-06-07T22:36:00.000-07:00

The Rupee quoted low against the dollar following weak Asian currencies and selling of the dollar by banks. The U.S. currency gained the most versus majors in more than three months as traders added to bets the Federal Reserve will boost interest rates this year after a government report showed the U.S. lost fewer jobs than expected in May.

Technical Outlook:

USDINR is expected to trade in a narrow trade for the day. With the trading range between 47.10-47.40 levels for the day. Good support is seen at 47.02 levels and key resistance is seen at 47.50 levels. Stochastic is trending up and the currency is seen trading above the moving averages but tight bollingers shows a narrow trade.

Fundamental Outlook_jun 08-13

2009-06-06T00:44:00.000-07:00

Indian rupee held in a tight band of 46.73-47.32 and closed at 47.10 levels unchanged for a third week as post-election strength remained contained by worries that the central bank did not want the currency surging past 47 per dollar. The rupee was unable to sustain any gain beyond 47 since jumping about 5 percent in two days after the ruling coalition won an unexpectedly strong mandate at elections and the central bank appeared to be buying dollars to stem its strength .Foreign exchange reserves rose $1.66 billion for the week largely due to dollar purchases by the Reserve Bank of India to stem the rise of the rupee against the dollar. Also there has been some revaluation impact of non-dollar assets in reserves because the dollar is weakening against the local currency in international markets. With foreign portfolio investors bringing in chunks of dollars into the country, RBI has been mopping up these inflows to prevent the rupee from strengthening against the dollar.
Looking ahead for Dollar US economic calendar promises far fewer top-tier releases in the days ahead as what it lacks in quantity it compensates with substance. Foreseeable highlights will come on historically market-moving Advance Retail Sales data, University of Michigan Consumer Confidence survey results, and international Trade Balance figures. NFP numbers showed that the US consumer lost fewer jobs than feared through the month of May, but the sizeable loss still bodes poorly for downtrodden household spending rates. Given the combination of massive wealth destruction and near-catastrophic jobs losses, the historically voracious US shopper cut back on Retail spending by a sizeable 9.4 percent . University of Michigan Consumer Confidence and Trade Balance forecasts are relatively sanguine, but they are less likely to force major US Dollar moves than the Advance Retail Sales report. Looking ahead the Euro Zone’s economic calendar will look relatively light. Sentix Investor Confidence is anticipated to improve slightly to an 8-month high of -31 for the month of June from -34.3, as European equity markets have steadily climbed higher. Meanwhile the German Trade Balance and Industrial Production readings for the month of April are likely to reflect the impact of weak export demand from the nation’s trading partners, as the trade surplus may narrow to 9.3B euros from 11.3B euro, while industrial output could shrink an annualized 20.5 percent. The final German CPI figures aren’t anticipated to reflect any revisions but that is expected to leave the annualized rate of inflation at zero, signaling deflation potential. Finally, the ECB’s Monthly Report may not shed much more light on the ECB’s policy bias, Investors are likely to keep an eye out for surprising comments as they could easily shake up the euro upon As for Pound data, the docket is thin but potent. Consumer spending will be measured through the BRC’s retail sales for May. Though expectations are low. For factory activity, the plunge in industrial production has eased significantly through first quarter. Housing price indicators and trade figures will round out the picture with indirect appraisals of credit availability and foreign demand. Thorough measure of health next week for Yen will be the final reading of 1Q GDP, which will no doubt confirm the worst slump on record. The more timely indicators could bolster sentiment though and few bright spots on the economic calendar are the trade balance, Eco Watchers survey, consumer confidence survey and leading indicators index are all expected to show measured improvements next week. Upcoming data suggests that the Australian economy is in the midst of a continued downturn, interest rate expectations could change as the Australian labor markets started to deteriorate during the second half of 2008 and this is likely to continue through 2009. While we did see a surprise improvement in April, the May results are projected to show that the unemployment rate rose back up to 5.7 percent while the net employment change is anticipated to fall by 30,000. The latter report tends to have a greater impact on the Aussie since the figure rarely meets expectations and can lead to volatile short-term price action for the Australian dollar.

Evening Report-Jun 05.

2009-06-05T04:45:00.000-07:00

The Indian Rupee was virtually unchanged in low volume in line with other Asian currencies as a steady stock market failed to provide direction. The U.S. dollar lost ground during the overnight as higher equity prices continued to fuel a rise in risk appetite however, a dismal Non-Farm Payrolls report could drag on the markets as investors weigh the outlook for global growth. The U.S. labor market is projected to have lost 520K jobs in May, while the annual rate of unemployment is anticipated to reach a 26-year high of 9.2% but, the ADP report earlier this week showed a 532K drop in private-payrolls, which already exceeds the NFP forecast, and a bigger-than-expected drop in employment could drive the greenback higher as the reserve currency continues to benefit from safe-haven flows. In addition, the economic docket is expected to show a slower decline in consumer credit for the month of April but nevertheless, the release may reflect a deepening downturn in lending activity as households face a weakening labor market paired with a weakening outlook for future growth. The Euro ticked up during the overnight trade to reach an intra day high of 1.4229, but pare gains throughout the European session to trade at 1.4190 ahead of the U.S. Non-Farm Payrolls report. . Nevertheless ECB President Trichet continued to reinforce an improved outlook for future growth following the interest rate decision while the Bundes bank expects economic activity in Germany to contract 6.2% this year and stagnate in 2010. In addition the German central bank went onto say that they expected price growth to average 0.1% this year, while the annual rate of unemployment is anticipated to reach 10.5% by the middle of next year. The British pound continued to retrace the advance from earlier in the week during the overnight session, and slipped to an intra day low of 1.6018 as Prime Minister Gordon Brown faced pressures to resign from office. Mr. Brown shuffled the members of his Cabinet in an effort to secure his position, while rumors emerged Alistair Darling will continue to hold his post as the Chancellor of the Exchequer. As political tensions threaten the outlook for long-term stability, the Sterling may continue to depreciation against its major currency counterparts, and investors are likely to hold a bearish bias against the pound as the outlook for growth and inflation remain bleak. Meanwhile the economic docket for the U.K. showed producer prices increased for the third consecutive month in May, with input prices rising 0.4% from the previous month, led by higher energy costs. At the same time output prices increased 0.4% during the month with the annual rate falling 0.3% while the core measure grew 0.2% during the month amid expectations for a 0.3% rise. Japanese Yen plunged to a 3-day low of 96.93 against the US dollar.

Yen edged higher-Jun 05.

2009-06-05T04:44:00.000-07:00

Japanese Yen with the USD/JPY starting to edge higher the market is on edge that the Yen may be close to new bouts of selling with crosses sitting just under new head highs. EUR/JPY remained buoyant although year highs at 138 are proving difficult to test. chart is expected to have a bullish correction for the day . With the trading range between 96.20- 97.20 levels. Stochastic and Relative strength index are seen trending up and the currency is trading above the moving averages trying to form bullish crow pattern taking resistance at 97.50 levels .Good support is seen at 96.00 levels.

Euro rangeboung but sterling pushed lower-Jun 05.

2009-06-05T04:41:00.000-07:00

Euro kept to a relatively tight range with weakness before the ECB press conference being short-lived. When Trichet said nothing to spook the market and the ECB held at 1.00% with no expansion of the quantitative easing the market tested 1.4200 but couldn’t close above. Looking ahead, Trichet Speaks. Sterling surged on news housing prices jumped 2.6% in May from a Halifax report. The BoE held at 0.5% and did not expand QE program. Rumors of PM Brown resignation sent the pair crashing towards 1.61. Also weighing on the Pound was end of the $15B chinalco-Riotinto deal. Looking ahead for PPI is forecast at 0.8% in May.

Technical Outlook:

EURO chart pattern is expected to be on a sideways note for the day. Currency is expected to trade in the range of 1.4060-1.4300 levels. Daily Momentum and stochastic are seen trending down and Euro is trading on the moving average only crossover can confirm the trend. Parabolic is holding on its bullish outlook. Good support is seen at 1.4020 break of which will see 1.3980 and key resistance is seen at1.4330 levels .

GBP chart pattern is expected to form a bearish crow pattern and trade in the range of 1.5990-1.6230 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards the possibility of downside correction to 1.5930 levels break of which will take it to 1.5880 .Key resistance for the currency is seen at 1.6280 levels.

Rupee in narrow trade on steady stocks-Jun 05.

2009-06-05T04:39:00.000-07:00

Rupee strengthened in early trade due to heavy dollar buying in anticipation of heavy capital inflow by foreign funds buoyed by the announcement of the Government's 100-day agenda. U.S. Dollar was relatively unchanged against most pairs as the large moves seen on Wednesday night were consolidated. The major move seen in the market was the GBP/USD which fell aggressively after rumors spread through the market of PM Brown possibly resigning. Weekly Jobless Claims improved to 621K vs. 625K. Crude Oil finished down $2.69 to finish the day at $68.81 a barrel. Looking ahead for May Non Farm Payrolls are forecast at -520K vs. -539K. The May Unemployment rate is forecast at 9.2% vs. 8.9%.

Technical Outlook:

USDINR is expected to trade in a narrow trade for the day. With the trading range between 46.90-47.22 levels for the day. Good support is seen at 46.78 levels and key resistance is seen at 47.32 levels. Stochastic is trending down and the currency is seen on trading above the moving averages but tight bollingers shows a narrow trade.

Evening Report-Jun 04.

2009-06-04T04:46:00.000-07:00

Indian unit closed at 47.19 and was seen on a weakening note as Indian state-run banks were seen buying dollars around 47.10 rupees as the Indian currency tried to edge back towards seven-month peaks reached in the previous session.Mixed clues from stock market also avoided volatile trade.The U.S. dollar weaken against its European counterparts and may continue to face increased selling pressures ahead of the BoE, ECB, and BoC rate decisions as the policymakers attempt to put a floor on their respective benchmark interest rate, and a rise in market sentiment is likely to weigh on the exchange rates as market participants raise their appetite for higher risk/reward investments. At the same time, a report by the Labor Department is anticipated to show a fall in initial jobless claims, while continuing claims for unemployment benefits are expected to rise to a record-high of 6855K in the week ending May 23. As investors eagerly await the Non-Farm payrolls report scheduled for Friday, a dismal jobless claims report could spur demands for the greenback as the reserve currency continues to benefit from safe-haven flows. Euro bounced back to reach an intraday high of 1.4243 against the U.S. dollar during the overnight session, and the single-currency may continue to push higher into the U.S. open as the European Central Bank attempts to put a floor on the benchmark interest rate. At the same time, the central bank is widely expected to unveil its outline for the EUR 60B covered bond purchase in full detail however, as the Governing Council fails to meet on common ground, a lack of decisive action could weigh on the exchange rate as the outlook for growth and inflation remains bleak.The economic docket for the Euro-Zone showed retail spending increased 0.2% in April, which was in-line with expectations, while the annual rate of consumption slipped 2.3% from the previous year amid expectations for a 2.9% drop. Nevertheless, The ECB rate decision highlights the major event risk for the euro over the next 24 hours of trading, and the Q&A session with President Trichet is likely to move the markets as investors continue to weigh the outlook for future policy. The central bank head is likely to hold a dovish tone as he expects inflation to fall below the 2% target later this year but at the same time, the CPI estimate fell to a record-low of 0.0% in May, and mounting risks for deflation could lead policymakers to ease policy further in an effort to stimulate the ailing economy. British pound pared losses during the overnight, and bounced back to reach an intraday high of 1.6435 during the European trade as U.K. house prices unexpectedly increased in May. The Halifax house price index increased 2.6% from April, which beat expectations for a 1.0% drop, while prices fell at an annual rate of 16.3% in the three-months through May. Meanwhile, the Bank of England is widely expected to hold the benchmark interest rate steady at the record-low of 0.50%, and market participants speculate that the central bank will utilize the remaining GBP 25B of the GBP 150B allotted by the Chancellor of the Exchequer in an effort to stem the downside risks for growth and inflation. However the MPC may adopt a wait-and-see approach this month as policymakers anticipate an economic recovery this year, and long-term expectations for higher interest rates may continue to drive the British pound higher over the near-term as the BoE puts a floor on the interest rate.Yen plunged to a 3-day low of 96.70 against the US dollar as Japanese Q1 Capex Plummets On Easing Profits .Japanese companies reduced their spending on plant and equipments in the first three months of 2009 as plunging profits forced corporates to cut investment.

Yen traded on a tight range-Jun 04.

2009-06-03T22:40:00.000-07:00

Japanese Yen kept inside the recent range around 96 Yen as the crosses took the brunt of the action overnight. Carry trades were sold aggressively from year highs. AUD/JPY and CAD/JPY were especially hard hit. Q1 Capex -25% y/y. Chart is expected to have a bullish correction for the day . With the trading range between 95.80- 96.80 levels. Stochastic and Relative strength index are seen trending up and the currency is trading above the moving averages trying to form bullish crow pattern taking resistance at 97.10 levels .Good support is seen at 95.50 levels.

Pound and Euro dropped ahead of rate decision-Jun 04.

2009-06-03T22:37:00.000-07:00

Euro took a major hit in early Europe on the Asian central bank news as traders took profits on the recent rally and ahead of the ECB meeting tonight. Further losses were limited however as the Euro managed to gain against other riskier currencies. Of concern is recent reports of funding crisis in eastern Europe. Sterling dropped hard in the face of better than expected economic data with profit taking in full control. The sharp drop also coincide with a recommendation from Goldman Sachs to exit long cable trades as the 1.6500 level objective has been reached. GBP/JPY was also rejected the 160 Yen level. Looking ahead BOE rate Announcement.

Technical Outlook:

EURO chart pattern is expected to be on a sideways to bearish note for the day. Currency is expected to trade in the range of 1.4050-1.4300 levels. Daily Momentum and stochastic are seen trending down and Euro is trading above the moving average hinting that long term bull trend remains intact. Good support is seen at 1.4020 break of which will see 1.3980 and key resistance is seen at1.4330 levels .

GBP chart pattern is expected to trade in the range of 1.6120-1.6430 levels for the day. Momentum is seen trending down and the Relative strength index is also trending down hinting towards the possibility of downside correction to 1.6080 levels .Key resistance for the currency is seen at 1.6530 levels.

Rupee depreciated as USD stabilized-Jun 04.

2009-06-03T22:35:00.000-07:00

Indian rupee depreciated against the dollar in early trade today as banks bought the dollar on behalf of importers and after the USD stabilized against a basket of currencies in Asian markets. U.S. Dollar enjoyed a positive day on the back of large corrections on multiple currencies. Large moves in Europe were seen on the back of combined statements from the Japan, India, Korea and China all supporting US debt. US stocks fell after ISM non manufacturing at 44.0 vs. 45.1 forecast. Crude Oil finished down $2.43 to finish the day at $66.12 a barrel. Looking ahead, Weekly Jobless Claims are forecast at 620 vs. 623K previously.

Technical Outlook:

USDINR is expected to trade in a narrow range and give bullish correction for the day. With the trading range between 47.05-47.42 levels for the day. Good support is seen at 46.90 levels and key resistance is seen at 47.50 levels. Stochastic is trending up and the currency is also seen trading above the moving averages giving bullish outlook but tight bollingers shows a narrow trade.

Euro and pound shed their gains as market in overbought levels-Jun 03.

2009-06-03T04:35:00.000-07:00

The Euro another day, another fresh high as the rally continued above 1.4300. The April Unemployment rate ticked higher to 9.2% vs. 8.9% previously. The market is now looking to the ECB meeting on Thursday and whether they expand the Quantitative Easing program. Looking ahead for May PMI Services are forecast at 44.7 vs. 43.8 previously. Also released April PPI is forecast at -0.8% vs. -0.7% m/m previously. . Sterling dipped into the start of the European session as UK credit Growth was weak at 300m Pounds in April, up on March but still well down on historical averages. EUR/GBP gave up some of the recent gains as the Euro continued its rally unaffected. Looking ahead for PMI services are forecast at 49.2 vs. 48.7 previously.

Technical Outlook:

EURO chart pattern is expected to be on a sideways to bearish note for the day. Currency is expected to trade in the range of 1.4250-1.4380 levels. Daily Momentum and stochastic are seen trending down and Euro is trading above the moving average hinting that long term bull trend remains intact. Good support is seen at 1.4190 and key resistance is seen at1.4400 levels .Market strategy for the day is Sell at 1.4370, Target : 1.4260,1.4190 Stop loss : 1.4420
GBP chart pattern is expected to trade in the range of 1.6490-1.6695 levels for the day. Momentum is seen trending down and the Relative strength index is also trading at overbought areas hinting towards the possibility of downside correction to 1.6450 levels .Key resistance for the currency is seen at 1.6720 levels. Caution required as the market holds above the moving average and only break below it can confirm the trend.

Rupee strengthened as Gains in the stock market also boosted sentiment-Jun03.

2009-06-03T04:33:00.000-07:00

Rupee strengthened to its highest in seven months as the U.S. unit continued its southward journey against major currencies. Gains in the stock market also boosted sentiment. U.S. Dollar felt more pressure as investors continued to pressure the Dollar on the back of more rumblings from Asian disquiet with US debt. Pending Home sales kept the mood in the market positive with April up 6.7% vs. 0.5% forecast. US stocks manages a third day of gains. Crude Oil finished down $0.03 to finish the day at $68.47 a barrel. Looking ahead for ISM Non Manufacturing is forecast at 46.5 vs. 45.2 previously. April Factory Orders are forecast at 0.9% vs. -0.9%.

Technical Outlook:

USDINR is expected to give a downward correction for the day. With the trading range between 46.55-47.15 levels for the day. Good support is seen at 46.40 levels and key resistance is seen at 47.22 levels. Stochastic is trending down and the currency is also seen trading below the moving averages giving bearish outlook but market at oversold area giving a caution signal.

Evening Report-Jun 03.

2009-06-03T04:32:00.001-07:00

Rupee pared gains and closed at 47.00 levels backing away from 7-month highs tracking a choppy share market and on some stability in the dollar versus major units globally. The U.S. dollar strengthen across the board as India, China, and South Korea raised support for the greenback as the reserve currency for the global economy however expectations for a 0.9% jump in factory orders paired with a rise in the ISM Non-Manufacturing index could lead investors to raise their appetite for risk as growth prospects improve. At the same time, the ADP employment report is expected to show a 525K drop in private payrolls, which could instill a dour outlook for the Non-Farm Payrolls report due out on Friday, and a rise in risk aversion should lead the dollar higher as the reserve currency continues to benefit from safe-haven flows. Meanwhile, Fed Chairman Ben Bernanke is scheduled to testify and encouraging comments from the central bank head could weigh on the exchange rate as risk trends continue to drive price action in the financial markets. The Euro pulled back after reaching an intra day high of 1.4339 and the single-currency may continue to fall lower as investors weigh the outlook for future policy. The economic calendar showed producer prices in the Euro-Zone fell at a record-pace in April, and the drop in inflation could lead the European Central Bank to take additional steps to shore up the economy as the central bank maintains its one and only mandate to ensure price stability. As the Governing Board holds a dovish outlook for price growth, expectations for further easing could lead the EUR/USD to retrace the advance from the beginning of the week, and may fall back below the 1.4100 level to test 1.4052, last week’s high, for support. The preliminary GDP reading showed the economy contracted 2.5% in the first quarter, which was in-line with expectations, while the annual rate of growth plunged 4.6% from the previous year amid forecasts for a 4.6% drop. The breakdown of the report showed household consumption fell 0.5%, with business investments tumbling 4.2%, while government spending held flat from the previous quarter. In addition, the final services PMI reading unexpectedly ticked higher to 44.8 from 44.7, with the composite index increasing to 44.0, and the data suggests economic activity is falling at a slower pace as policymakers take unprecedented steps to soften the landing of the economy. Moreover the producer price index 1.0% in April, while the annualized rate plunged 4.6% to mark the biggest drop on record, and the weakening outlook for inflation could lead the ECB to hold a dovish outlook going forward as price pressures falters. As a result, the central bank is surely to adopt unconventional tools at the policy meeting tomorrow, and mounting risks for deflation could lead the board to purchase more than EUR 60B in Euro-denominated bonds to stem the downside risks for inflation. British pound pulled back from a fresh trend high of 1.6664 to hold near 1.6545 even as service-base activity increased for the first time since April 2008. The U.K. services PMI jumped to 51.7 in May from 48.7, which topped forecasts for a reading of 49.5, and the data encourages an improved outlook for future growth as service-based activity accounts for nearly two-thirds of the economy. At the same time market participants speculate the Bank of England to expand its asset purchase program at the rate decision tomorrow as Governor Mervyn King projects a slow and protracted recovery later this year, and long-term expectations for higher interest rates in the U.K. may continue to drive the Sterling higher as economic activity improves. Japanese Yen Holds Narrow Range Between 95.40-96.40 levels .

Evening Report-Jun02.

2009-06-02T04:55:00.000-07:00

Indian Unit was seen on a choppy trade and closed at 47.00 taking clues from the volatle stock market.India's infrastructure sector output grew 4.3 percent in April from a year earlierU.S.Dollar has managed to recover some of its losses from yesterday as markets have been quiet ahead of the major event risk on the week. Non-farm payrolls and rate decisions from several major central banks have left forex traders cautious. volatility is expected from the upcoming pending home sales release, if it beats expectations of a 0.5% gain. Trades will need a greater improvement that the forecast in order to get reenergized about the housing market.Sector had started to show signs of stabilization, but signs of growth in could be the next catalyst to push risk appetite higher. Over the near-term downside risks remain for the dollar as improving fundamental data continues to have a greater impact than any negative news at this time, as markets are convinced that the worst is behind us and that the question is what type of recovery is ahead. The Euro has also been adversely impacted by easing risk appetite and has fallen as low as 1.4105 after reaching 1.4248 yesterday. Yet, there was no major reaction to the Euro-zone unemployment level rising to 9.2% from 8.9% which was the highest in almost a decade. Companies continue to be forced to lay off workers as they battle slumping demand and shrinking profit margins. Indeed, French producer prices fell 0.9% in April led by a 4.2% drop in mining, which will lead to further disinflation in the region and keep deflation concerns relevant. Swiss GDP contracting by 0.8% versus expectations for -1.5% in the first quarter and the country’s PMI reading improving to 39.8 from 36.5 shows that conditions are stabilizing in Europe and the Euro-zone the export driven economy’s main trading partner.The pound has remained heavy despite an improvement in lending and a jump in construction activity. Quiet equity markets have set the tone for forex price action as we have seen some profit taking after the recent rally. Nevertheless, fundamentals continue to improve for the country as mortgage approvals rose to 43,000-the highest in almost a year and the construction PMI reading jumped to 45.9 from 38.1. The improvement in lending was also seen in net consumer credit rising by 0.3%, but it remains near record low levels and considering the quantitative easing efforts from the BoE more could be expected. The central bank is forecasted to keep its benchmark rate and bond purchase efforts unchanged at their upcoming meeting, which most likely means that they will not release a statement. However, we could see some type of report card on their efforts to improve credit conditions which could spark volatility. If the MPC shows that they are satisfied with their results and expect that lending standards will continue to ease then we may see further pound strength..Japanese yen showed strength against its major counterparts and traded at 95.72 levels .Japanese Finance Minister said that the country's economy may have hit bottom during the January-March period, underscoring his cautious optimism about the economic outlook. Remarks came after data on Monday showing that supply outstripped demand by 8.5%, or about Y45 trillion in annualized terms, during the January-March quarter.The monetary base in Japan was up 7.9 percent on year.

Yen gained on speculation of exporter buying-Jun 02.

2009-06-01T23:08:00.000-07:00

Japanese Yen strengthened as the USD slumped with support found at 94.50. US stocks rallied and the increase in treasury yields led to a powerful US session rally to just below 97 Yen. Crosses used the move to catapult to fresh year highs.

Technical Outlook:

chart is expected to have a bullish correction for the day . With the trading range between 96.05- 97.10 levels. Stochastic and Relative strength index are seen trending up .Momentum is also supporting the same . Good support is seen at 95.80 levels and key resistance is seen at 97.40 levels for the day.

Euro and Sterling fell on USD strength-Jun 02.

2009-06-01T23:04:00.000-07:00

Euro surged through the 1.4200 level before settling in an upper range for the rest of the day. Some USD strength was seen on the back of increasing long term US interest rates. Looking ahead, April Unemployment Rate is forecast at 9.1% vs. 8.9% previously. fresh .Sterling got right to work in Europe surging towards above 1.6400 to test 1.6500 before running out of steam. GBP/JPY and EUR/GBP also helped to propel the currency higher. Reasons for the recent demand for GBP are linked to the size of selling in 2008 and the recovery of the banking industry and the effect this has had on the UK economy. Looking ahead, April Mortgage Approvals are forecast at 41k vs. 39k previously.

Technical Outlook:

EURO chart pattern is indecisive only break below 1.4120 can confirm the bear trend.. Currency is expected to trade in the range of 1.4050-1.4230 levels. Daily Momentum and stochastic are seen trending down. Relative strength is also supporting the downside correction It is expected to take support at 1.3980.Resistance is seen at 1.4260 levels. Euro is trading above the moving average hinting that long term bull trend remains intact.

GBP chart pattern is expected to trade in the range of 1.6260-1.6560 levels for the day. Momentum is seen trending down and the Relative strength index is also trading at overbought areas hinting towards the possibility of downside correction to 1.6130 level;s .Key resistance for the currency is seen at 1.6580 levels. Caution required as the market holds above the moving average and parabolic is also holding the bull note for long term.

rupee lost as dollar recovered against majors

2009-06-01T23:01:00.000-07:00

The Indian rupee backed away from a more than five-month peak as the dollar recovered some of its steep losses versus major currencies. U.S. Dollar a triple barrage of higher risk appetite, commodity prices and higher stocks sent the dollar to fresh year lows. ISM manufacturing improved to 42.8 vs. 42.5 forecast at the economy continues to rebound. Oil continued to rally on the back of the broad USD weakness. Crude Oil finished up $2.27 to finish the day at $68.50 a barrel. Looking ahead for April Pending Home Sales are forecast at 0.5% vs. 3.2% previously.

Technical Outlook:

USDINR is expected to give a upward correction for the day. With the trading range between 46.90-47.30 levels for the day. Good support is seen at 46.80 levels and key resistance is seen at 47.42 levels. Stochastic has turned from the oversold levels and is seen trending up. Currency is trading below the moving average and is expected to test the average level of 47.30 for the day.

Evening Report-May 29.

2009-05-29T04:44:00.000-07:00

The Rupee strenghtened to its highest and closed at 47.10 following gains of over 2 per cent in the domestic shares and a sharp fall in the dollar versus major currencies overseas. India's economy grew a faster than expected 5.8 percent in the March quarter from a year earlier, as a still strong services sector offset a decline in manufacturing.The annual growth for India's fiscal fourth quarter was above a median forecast of 5.2 percent but sharply lower than the year-ago quarter's 8.6 percent expansion.The manufacturing sector contracted 1.4 percent in the January-March quarter from a year earlier, while farm output grew an annual 2.7 percent.The dollar remains under pressure as it continues to be hindered by the reversing of the risk trade. A jump in Japanese industrial production added to the improving global picture which could continue today with the U.S GDP reading. Forecasts are for the second reading of growth in the U.S. to be revised higher to -5.5% from -6.1%. A 51.8% decline in private investment was cited as the main driver of the contraction, so look for a revision of such a large shortfall. Chicago PMI and University of Michigan consumer confidence are also expected to show improvements which will add to building optimism of a recovery and could continue to weigh on the dollar.The Euro continued to find support overnight as it set a new yearly high of 1.4091 on the back of an improvement in April German retail sales and rallying equity markets. Consumer consumption in the Euro--zone’s largest economy rose for the first time in four months, increasing by 0.5% following a 0.4% decline the month prior. Warmer weather and Easter holiday shopping helped increase demand but may have skewed the figures. Meanwhile, forex traders ignored a record low Euro-zone CPI-estimate report which showed that inflation is expected to fall to 0.0% in April following 0.6% the month prior. The central bank may not be too concerned with falling prices and deflation concerns now as this was evident by comments from ECB member Vitor Constancio who stated that "For two years we won't be close to the official goal for inflation," but" there aren't significant risks of a deflationary spiral." Nevertheless, falling prices will continue to shrink profit margins for companies which are now facing increasing input costs which could lead to more job losses going forward.The pound continues to trade higher as a rebound in home prices and increasing risk appetite has pushed the GBP/USD back above 1.6000 to reach above the 5/27 high of 1.6079. Nationwide LLC showed that house prices rose 1.2% in May as thawing credit markets have started to fuel demand. The BoE continues their quantitative easing efforts in hopes of driving down interest rates and providing liquidity to the market. Meanwhile, the Gfk consumer sentiment reading remained unchanged at -27 as Britons continue to look for positive signs that the recession is bottoming. If the housing sector stabilizes then we could see a sharp pick up in optimism which will only add to the current sterling bullish sentiment. The next resistance level is at 1.6148 the November 5th, 2008 high, trades should be cautious as the 38.2% Fibo level of 2.0160-1.3494 at 1.6048 is a formidable resistance level and without a clean break above downside risks will remain. JPY traded on a softer footing during the Asian afternoon after it responded to a series of weak Japanese releases, although there was one positive after industrial output posted its biggest monthly rise in by 5.2%. USD/JPY remained on the backfoot in the Asian morning amid general dollar weakness but weak Japanese data and persistent speculative activity via the JPY crosses saw it make a gradual back up to 96.75-80, where it currently trades.Yen should hold up in this environment but an overhang of exporter selling interest and talk of real money hedging above 97.00 could hamper movement along with general dollar supply.

Yen weakened after Moody's rating-May 29.

2009-05-29T00:00:00.000-07:00

Japanese Yen weakened considerably in the Asian session after the affirmation of the US AAA rating from Moody’s. The pair trading above 96 and didn’t stop until sellers above 97 put a cap on the rally. Crosses were also very buoyant on the back of US stocks and are all nearing year highs. A major source of Yen selling was that Japanese Investors were looking for higher yields outside of Japan. Looking ahead, April Industrial Output is forecast at 3.2% vs. 1.6% previously.

Technical Outlook:
R1: 97.30 S1:95.90
R2: 97.50 S2:95.70
Yen chart is expected to have a small downside consolidation for the day . With the trading range between 96.10-97.20 levels. Stochastic and Relative strength index are holding on the bull trend and momentum is also pointing up hinting a bull run.

Euro and sterling rebounded sharply against dollar -May 29.

2009-05-28T23:57:00.000-07:00

Euro rebounding sharply from the 1.300 level grinding higher in the US session. Talk in Europe about future ECB policy focused on whether the 1.0% rate is the floor. German Unemployment data beat expectations at 1K vs. 66K forecast. Looking ahead, April German Retail Sales are forecast at 0.0% vs. -1% previously. May EU Flash Inflation is forecast at 0.2% vs. 0.6% previously y/y. . Sterling traded briefly above the 1.6000 level but ran into a wall of offers and pulled back. CBI distributive trades fell to -17 vs. -10 forecast. GBP/JPY was incredibly well supported traded at fresh year highs of 155 Yen. EUR/GBP gave up some of the gains seen yesterday. Looking ahead Nationwide House Prices are forecast to fall -0.9% vs. -0.4% previously

Technical outlook:

EURO R1: 1.4050 S1: 1.3850
R2: 1.4080 S2: 1.3820
Chart pattern shows a bullish note for the day. With the trading range of 1.3890 -1.4040 levels for the day. Stochastic is seen trending up and market is trading above the moving average giving bullish outlook and the view is also supported by momentum.

GBP R1: 1.6080 S1: 1. 5850
R2: 1.6100 S2: 1. 5830
Chart pattern is expected to be on a bullish note for the day and is expected to trade in the range of 1.5870-1.6060. Stochastic and momentum are seen trending up but the currency is also trading above the moving a confirming the trend.

Rupee gained on the back of weak USD-May 29.

2009-05-28T23:55:00.000-07:00

The Rupee gained for a third successive session buoyed by sharp losses in the dollar versus major currencies, but traders were awaiting the opening of the domestic share market for further direction. U.S. Dollar enjoyed another brief bounce in the Asian session as investor concerns about the GM bankruptcy and weak stocks weigh on sentiment. The main source of gains was against the Yen which came under heavy selling pressure as moody affirmed the US AAA Bond rating. US data was mixed with weekly jobless claims improving to 623 K but New Home Sales remaining weak at 0.352M vs. 0.36M forecast. Looking ahead, Q1 GDP is expected to be revised to -5.5% vs. -6.1%.

Technical outlook:

USDINR is expected to give a downward correction for the day. With the trading range between 47.25-47.70 levels for the day. Good support is seen at 47.20 levels and key resistance is seen at 47.78 levels. Stochastic is trending down and the currency is also seen trading below the moving averages giving bearish outlook.

Evening Report-May 28.

2009-05-28T04:49:00.000-07:00

Indian rupee reversed losses and closed at 49.60 levels as gains in domestic shares fueled hopes for capital inflows, but a sharper rise was prevented by the dollar's gains versus other majors overseas. India's wholesale price index rose 0.61 percent in the 12 months to May 16, matching the previous week's annual rise. It has been a mixed bag for the dollar as its earlier gains against the Euro and pound have been reversed and it continues to see momentum versus the Yen. Scanning the headlines you can see the conflicting sentiments as surging bond yields are causing fear that government efforts aren’t working and will reduce the chances of a recovery, while improving fundamental data and optimism is increasing its chances. The expected 0.5% rise in U.S. durable goods orders should add to the improving outlook for a global recovery which could weigh on the dollar as risk appetite picks up. U.S. futures are pointing toward a higher open despite the weakness in Europe which may be in anticipation of the positive fundamental data. Initial jobless claims and new home sales are also due for release and are forecasted to improve mildly which will add to the increasing optimism. Euro reached as high as 1.3885 on the back of a positive labor report which showed unemployment easing back to 8.2% from 8.3% as the economy only lost 1,000 jobs. Economist were expecting German companies to slash 64,000 workers from their payrolls as falling demand for exports continues to weigh on revenues. Meanwhile, the retail PMI indicator fell to 47.1 from 48.4 as weak labor conditions in the region continues to cause consumers to retrench. This was evident as the Euro-zone consumer confidence reading remained unchanged at -31. However, economic confidence which is the more closely watched figure improved to 69.3 from 67.2 as low interest rates and government spending is raising the outlook for future growth. The single currency reversed some of its losses from yesterday and continues to find support after the unemployment figures .The stabilization of the German labor market will go a long way in helping the Euro-zone get back on track and adds to the positive signs that the recession is bottoming. After posting a low of 1.5850 Cable rose and is trading at 1.5949 levels with not much data in hand. USD/JPY continued it s bullish momentum through Asian trading which pushed the pair just shy of the 200-Day SMA at 97.20. Japanese demand for dollar denominated assets on the back of an improving outlook for the global economy has been a steady driver of price action. The Yen didn’t receive any support from an improvement in retail trade of 0.6% in April. The improvement in domestic demand is another sign that confidence is rising in the country. Therefore the demand for carry start is expected to pick up which could signal more weakness ahead for the Yen.

Yen Weakens as Japanese Investors May Buy More Overseas Assets -May 28.

2009-05-27T23:12:00.000-07:00

Japanese Yen kept to a very tight range as the USD strengthened and Yen weakened broadly together. Most of the crosses were under pressure from the rise in risk aversion although USD/JPY was very well supported on dips under 95. April Retail Sales are forecast at -2.9% vs. -3.3%.

Technical Outlook:

R1: 96.80 S1:95.30
R2: 96.90 S2:95.20
Yen chart is expected to have a bullish move for the day . With the trading range between 95.40-96.70 levels. Stochastic and Relative strength index are seen trending up and momentum is also pointing up hinting a bull run.

Euro and pound fell on profit taking-May 28.

2009-05-27T22:49:00.000-07:00

Euro struggled at the 1.4000 level before falling heavily in the final hours of the day on the back on rising US yields. The pair fell to 1.3850 but speculated support failed to appear and the slide continued into Thursday. Also hurting the sentiment was a FDIC report with a negative outlook on US loan quality. German CPI fell to 0.0% on a y/y basis. Sterling broke comfortably back above 1.6000 the highest level since January as EUR/GBP selling and the UK mortgage industry showed signs of rebounding off November lows. The late equity pull back saw the 1.6000 handle being given up on profit taking. Further gains will require the continuing recovery of global financial system.

Technical Outlook:

EURO R1: 1.3980 S1: 1.3730
R2: 1.4020 S2: 1.3720
Chart pattern shows a bearish note for the day. With the trading range of 1.3750 -1.3950 levels for the day. Stochastic is seen trending down and market is trading below the moving average giving a bearish outlook and the view is also supported by momentum.

GBP R1: 1.6040 S1: 1. 5800
R2: 1.6050 S2: 1. 5760
Chart pattern is expected to be on a bearish note for the day and is expected to trade in the range of 1.5820-1.6020. Stochastic and momentum are seen trending down from the overbought area but the currency is trading on the moving average only break below it can confirm the trend.

Rupee fell past 48 to meet the month end demand-May 28.

2009-05-27T22:47:00.000-07:00

The Rupee fell past 48 per dollar to its lowest in nearly two weeks as the US unit gained against other major currencies while dollar demand from importers to make month-end payments also weighed. U.S. Dollar tested new lows in the Asian and European sessions before rebounding sharply into the close of the day. US stocks sold off in the afternoon on the back of rising US Treasury Yields hurting investor sentiment in stocks and Commodities. Existing Home Sales are forecast at 4.68M vs. 4.65M forecast. Crude Oil finished up $2.20 to finish the day at $63.20 a barrel. Looking ahead for Weekly Jobless Claims are forecast at 630k and New Home Sales are forecast at 0.36M vs. 0.356M previously.

Technical Outlook:
USDINR is expected to give bullish move for the day. With Good support seen at 47.22 levels and key resistance is seen at 48.20.Currency is expected to trade in the trading range of 47.78- 48.12 levels for the day. Stochastic is seen trending up and Market is trading above the moving average level bullish outlook but since it is trading on the upper band so possibility of downward correction cannot be ruled out .

Evening Report-May 27.

2009-05-27T05:07:00.000-07:00

The Indian rupee traded higher in afternoon session and closed at 47.70 levels as gains in domestic equities raised hopes of more capital inflows and higher Asian units also underpinned sentiment. The dollar continues to remain under pressure as the optimism fueled by the jump in U.S. consumer confidence yesterday has carried through Asian and European trading sessions. The improvement in sentiment overshadowed a decline in the S&P/Case Schiller home price index which could get more weight today if the existing home sales indicator confirms weakness in the housing sector. Additionally, the home price index is expected to disappoint the S&P Case Schiller report with a 0.2% gain. A positive housing report will add to the improving outlook for a economic recovery and could add to the bearish dollar sentiment. The Euro regained its footing after falling to an intra day low of 1.3927 after the EUR/USD failed to hold above 1.4000 which continues to serve as formidable resistance. Equity markets higher in Europe are helping support the pair as risk appetite continues to rise following the rally in U.S. market yesterday. A slight increase in French consumer confidence to -40 from -41 continues the trend of increasing optimism which was reinforced by the improvement in business sentiment to 72 from 71. However, the outlook for production significantly declined to -50 from -16 which should be a concern and may be a sign that future growth is still in the distance for the region. ECB member Noyer testifying in front of the French Senate’s finance committee stated that the banking system still has the consequences of the credit crisis ahead of it which leaves potential risks for borrowers. The Pound reached above the 1.600 price level for the first time since November, 2008 as the Sterling continues to benefit from improving optimism but failed to hold the level . Banks in the U.K. approved 27,685 new mortgages in April which missed estimates of 28,000 but was an improvement from the 26,671 the month prior. The housing sector continues to show signs of lift which is helping to put a bottom on the current downturn. The Yen saw some brief support as the merchandise trade balance turned from a deficit into a surplus of 69.08 billion in April. The country saw the rate of decline of its exports slow to -39.1 from -42 which markets took as a sign that the country’s recession is easing. Additionally, small business confidence rose for a fourth month which is another positive sign for growth as they account fro the majority of hiring in the country.

Euro fellon political concerns but sterling rallied-May 27.

2009-05-26T23:01:00.000-07:00

The Euro fell as stocks and sentiment soured in Asia on the back of saber rattling from North Korea which launched missile tests to back up the nuclear test on Monday. The fall from 1.4000 tested support under 1.3900 before rebounding with US stocks. March Industrial Orders fell -0.8% vs. 0.8% forecast. . Sterling rallied sharply off European lows although settled comfortably below the key 1.60 level. The banking sector rebound is helping the Pound to recover faster than other currencies with London a major financial center.

Technical Outlook:
EURO R1: 1.4080 S1: 1.3830
R2: 1.4120 S2: 1.3770
Chart pattern shows a bearish note for the day. With the trading range of 1.3840 -1.4050 levels for the day. Stochastic is seen trending down and market is trading below the moving average but caution required as momentum is pointing up.

GBP R1: 1.6080 S1: 1. 5830
R2: 1.6090 S2: 1. 5780
Chart pattern is expected to be on a bullish note for the day and is expected to break up the psychological resistance level of 1.6000 and extend the movement till 1.6050 if not able to sustain above that level will take support at 1.5850. Stochastic and momentum are seen trending up from the overbought area and the currency is also trading above the moving average confirming the trend.

Rupee strengthened on hopes of capital inflows-May 27.

2009-05-26T22:58:00.000-07:00

The Rupee strengthened snapping a two-day fall, as gains in regional share markets fueled hopes for capital flows into local shares. But month-end dollar demand is likely to limit a sharp rise. U.S. Dollar tested both sides of the market with early strength reversing sharply in the US. Better than expected May CB Consumer Confidence at 54.9 vs. 42 forecast was the main catalyst for the reversal. Concerns over demand for US bonds were lessened overnight as a large Treasury Auction was well received. The improvement in consumer confidence led to large gains in stocks and risk appetite improved. Looking ahead, Existing Home Sales are forecast at 4.66M vs. 4.57M previously.

Technical Outlook:

USDINR is expected to give sideways move for the day. With Good support seen at 47.22 levels and key resistance is seen at 47.95.Currency is expected to trade in the trading range of 47.30-47.90 levels for the day. Stochastic is seen trending down but only crossovers can confirm the trend. Market is trading above the moving average level giving sideways outlook.

Evening Report-May 26.

2009-05-26T04:47:00.000-07:00

The rupee depreciated and closed at 49.92 levels on sustained demand from importers for the American currency coupled with a strong dollar in overseas markets The dollar has been supported throughout the overnight session on the heightened geopolitical risks and a declining outlook for a global recovery. The economic docket may not have a top tier release on tap, but the combination of housing, manufacturing and sentiment data could impact price action if they combine to tell the same story. A stabilizing housing market combined with the expected improvement in consumer confidence from 39.2 to 42.6 and a pick up in manufacturing activity in the Richmond and Dallas regions should raise the outlook for a U.S. economic recovery. Euro has steadily declined during post holiday trading as weak fundamental data and increasing risk aversion and the North Korean Nuclear test have combined to dragged the currency below the 5/22 low of 1.3888. Indeed the final German GDP reading remained unchanged at -6.1% as the country experienced its deepest quarterly contraction on record. A drop in exports which fell 9.7% was the main driver of the economic downturn as global demand continues to be impacted by the credit crunch. However the decline was revised higher from initial estimates of -11.7% which combined with the unexpected 0.5% increase in private consumption provides some hope that the economy is stabilizing. Meanwhile, industrial new orders in March unexpectedly fell -0.8% against expectations for a 0.8% gain. The decline in activity in the Euro-zone ends the trend of improving data for the region and could be a sign that any form of growth could be a ways off for the region. The pound has also been under pressure as it has felt the impact of declining confidence in a global recovery and the increased geopolitical risks. Indeed, North Korea is reported to have launched two more missiles following yesterday’s initial nuclear test which has been met with outrage by global leaders. Remarks from BoE member Andrew Sentence that it is too early to look for signs of growth has also added to the pound bearish sentiment. Japanese Yen is Supported By Political Fears. Currency rose after Yonhap News reported that North Korea carried out a missile experiment a day after conducting a nuclear test that provoked international condemnation.

Euro and Pound fell against dollar-May 26.

2009-05-26T04:45:00.000-07:00

Euro orbited 1.4000 during the day with profit taking and risk aversion failing to make a lasting impact on the pair. USD weakness has allowed a resurgent Euro to make substantial gains over the last week. May German IFO Business Climate was at 84.2 vs. 85.5 forecast. Looking ahead for March Industrial Orders are forecast at 0.8% vs. -0.6% previously. . Sterling was little changed with the market recovering from Asian losses during a quiet day of trade. Reports that China FX managers were ‘negative’ on the Pound did little to dent the bullish tone the pair has recently developed.

Tech outlook:

EURO R1: 1.4080 S1: 1.3850
R2: 1.4120 S2: 1.3770
Chart pattern shows a bearish note for the day. With the trading range of 1.3870 -1.4050 levels for the day. Stochastic and momentum are seen trending down but caution required as market is trading on the moving average only break below it can confirm the trend.

GBP R1: 1.6000 S1: 1. 5730
R2: 1.6020 S2: 1. 5720
Chart pattern is expected to be on a narrow trade for the day as the band width is narrow.. With the trading range of 1.5740-1.5980 levels for the day. Stochastic and momentum are seen trending down from the overbought area and the currency is also trading on the moving average only crossovers can confirm the trend.

Rupee dropped on Month-end dollar demand from oil refiners -May 26.

2009-05-26T04:43:00.000-07:00

The Rupee dropped for a second day tracking the dollar's gains versus major currencies overseas but traders were waiting for the domestic share market to open for further direction. Month-end dollar demand from oil refiners and importers was also likely to put pressure on the Currency. U.S. Dollar finished the day broadly unchanged as holidays in the UK and USA kept volume low. Some action was seen in Asia as news of a Nuclear test from North Korea caused risk aversion to notch higher. Gains were short-lived though as the market rebounded off post test lows. Looking ahead for May Consumer Confidence is forecast at 42 vs. 39.2 previously.

Technical Outlook:
USDINR is expected to give bullish note for the day. With Good support seen at 47.15 levels and key resistance is seen at 47.80.Currency is expected to trade in the trading range of 47.25-47.70 levels for the day. Stochastic is seen trending up from the oversold areas and the market is trading above the moving average level confirming the bull trend.