Market is expect to be open today (27/08/2012)

USDINR- Will open down

EURINR- Will open Flat

GBPINR- Will open down

JPYINR- Will open down

Forex Exchange Morning Report (24/06/2012)

Risk assets soured overnight despite fresh hopes for another round of Fed easing and slightly stronger than expected US and Eurozone data. The S&P500 fell 0.7% with the earlier weak HSBC China PMI cited as a more important catalyst as well as comments from an EC spokesperson that no negotiations were taking place with Spain for a sovereign aid program. Comments from St. Louis Fed President Bullard (hawkish, non-voter) that yesterday's FOMC minutes, 'are a bit stale' was also reportedly behind today's weakness, even as Evans (Chicago Fed, dovish) called for more easing in earlier Asian trading.

AUD and NZD tracked US equities lower, AUD shedding 0.6% while NZD fell 0.4%. AUD is trading at 1.0445 into the close while NZD is at 0.8135. AUD/ NZD fell to 5 week lows of 1.2835. EUR/USD bucked the trend overnight, grinding higher from 1.2530 to 1.2565

Economic wrap

US new home sales rose 3.6% in July, reversing June's 3.5% fall. With revisions the 3.6% gain saw an annualised sales pace of 372k, just a whisker away from our 371k forecast. A clear sales uptrend is now in place since August last year when sales were running a 292k pace. A separate report from the FHFA showed house prices up 0.7% in June, the fifth straight gain.

US initial jobless claims rose 4k to 372k, just above our high end 370k forecast. At this level, claims are in the middle of the recent 352k-392k range that has prevailed since April.

Euro zone composite PMI advance edges up from 46.5 to 46.6 in August. The German services PMI weaker (lowest since mid 2009) but the factory was higher; French services was higher but factory about flat. That saw the Euro zone factory PMI rise from 44.0 to 45.3 in Aug while the services PMI slowed from 47.9 to 47.5. The composite has been below 50 for 11 of the past 12 months, consistent with the mild recession in Europe since then.

Euro zone consumer confidence drops from –21.5 to –24.6 in Aug advance report, much weaker than any forecast and back at post-Lehman Bros collapse levels in late 2008.

German GDP unrevised at 0.3% in Q2; exports were the driver, up 2.5%.

UK CBI retail survey for Aug showed reported sales dropping from 11 to –3, suggesting Olympics buzz did not extend to the high street. Separately, the BBA reported 28.4k new mortgages in July, reversing much but not all of the dip from 30.0k in May. June was weighed down by the Jubilee bank holidays

Market is expected to be open today (24/08/2012)

USDINR- will open down
EURINR-will open down
GBPINR-will open flat or down
JPYINR will open down

Forex Exchange Morning Report (17/08/2012)

Sentiment was buoyed by hopes for Spain. An influential advisory report claiming Spain was willing to accept fiscal reforms in exchange for heavy ECB intervention in its bond markets was cited as a major catalyst for the rally in equities and currencies last night. German Chancellor Merkel added that the ECB's vow to do whatever was necessary to defend the Eurozone was consistent with the views of European leaders. European equities closed 1.1% higher and the S&P500 is currently up 0.8%. The CRB commodities index is up 0.2%, with oil +0.6%, copper +1.0%, and gold 0.8%. US 10yr treasury yields were volatile, falling from 1.86% to 1.78% in London and then fully rebounding after the NY open. US data was mildly disappointing but had little market impact. The Spanish 10yr yield fell 12 bp to 6.52% - a one month low.

The US dollar index (DXY) fell by 0.7% overnight. EUR rose throughout the evening from 1.2256 to 1.2373. USD/JPY maintained Asian session gains in a 79.10-79.40 range, recent strength perhaps due to higher US interest rates. AUD turned upwards near the Sydney close at 1.0475 and continued to 1.0526, most of the gain coming after the advisory report on Spain. NZD similarly rose from 0.8055 to 0.8119. AUD/NZD fell from 1.3005 to 1.2960, the past few days' price action suggestive of a major reversal lower towards 1.2600.

Economic wrap

US Philadelphia Fed factory survey up 5.8pts to –7.1 in Aug, its fourth straight month of contraction. Orders, shipments and jobs all remained firmly in contractionary territory. So, NY, Philly, Richmond and Dallas Fed factory surveys are all slumping mid year as they did last year - the question now is do they recover sharply like in late 2011 or is the upside from here more subdued this time around?

US housing starts down 1.1% in July. A 12.4% jump in multiples offset a 6.5% fall in single family starts, the first decline in that sector in five months, and wiping out half of the 12% rise in single starts between March-June. Housing permits rose 6.8% with single family permits up 4.5%, their fourth straight gain. With permits (singles) running a 513k annualised pace in July vs starts on 502k, starts might recover somewhat later in Q3.

US initial jobless claims rose 2k to 366k in the week ended 11/8, suggesting that claims are stabilising back around their Feb-Mar lows just above 360k per week, after annual auto plant shutdown distortions in the July data. On this measure, the job market has improved somewhat relative to April-June when claims reached 390k+ per week.

Euroland core CPI edges up to 1.7% yr in July, its highest since 2009, but headline rate unrevised at 2.4% yr.

UK retail sales rose 0.3% in July, and June's 0.1% gain was revised up to 0.8%. July's annual sales volume growth rate of 2.8% yr is the third highest since 2008, surpassed only by temporary spikes in growth due to VAT changes or unusual weather disruption. The detail showed clothing and household goods sales fall, while other storetypes posted gains, but ex fuel there was no growth in the month. Changed public holiday arrangements in June, unseasonal weather swings and the Olympics are all factors that make this report difficult to interpret. It is clear, however, that heavy price discounting in clothing last month and fuel this month was behind the sharp monthly swings in those sectors. The retail deflator rose just 0.2% yr, its lowest since 2009, also a function of discounting