Market Expected today (1/06/2012)

USDINR- Will open up Positive


EURINR- Will open up Negative or Flat


GBPINR- Will open up sharp Gap down


JPYINR- Will open up Positive

Forex Exchange Morning Report

Market wrap

Risk appetite see-sawed overnight. The absence of fresh Eurozone negatives combined with oversold conditions saw risk appetite stage a modest rebound in Europe. But, weak US data turned the tide and markets quickly shifted to a risk averse stance through US trading. Market focus then shifted to reports that the IMF is drawing up contingency plans for Spain, helping stabilise markets for the rest of the session. US data was weak across the board. The Wall Street Journal reported that the European Department of the IMF has begun contingency planning for a Spanish rescue loan. IMF offi cials however shot down the story noting that the IMF is continuously in the process of drawing up contingency plans and Spain has not made any such request for assistance. Another Greek opinion polls was released showing that New Democracy, the main pro-bailout party is leading Syriza, the main anti-bailout party.

The S&P500 is currently down 0.2%, having been down more than 1% at one stage while Europe closed 0.1% higher. The CRB commodities index is down 0.4% (oil -1.0%, copper -0.8% and gold -0.1%). US 10yr treasury yields hit new multi-decade lows again touching 1.53% before rising back towards 1.58%. Eurozone peripheral bond spreads improved slightly (Spain's 10yr yield fell 10bp to 6.56%, Italy -4bp to 5.89%).

EUR staged a modest rally in European dealings, rising 70pts to highs near 1.2430 but gave back all those gains in US trading and hit fresh lows of 1.2336, weakness exacerbated by month-end rebalancing flows.Talk of an IMF plan for Spain helped stabilised the euro. USD/JPY extended its slide amid lingering Eurozone concerns, weaker US data and fresh lows in US bond yields, falling 0.9% to lows of 78.21, its lowest levels since mid-February. AUD dovetailed euro, rising in Europe from around 0.9720 to highs near 0.9764 before month end selling and weak US data saw it fall back to 0.9680. AUD is trading at 0.9745 currently, helped by the IMF/Spain chatter. NZD fell from European session highs near 0.7577 to a low of 0.7501 and is now trading at 0.7543.

Economic wrap

US Q1 GDP was revised down in line with expectations to 1.9%, from 2.2% in the advance release. Meanwhile jobless claims rose 10k to 383k while the ADP employment survey came in at +133k, both reports confi rming that the jobs market remains sluggish (our expectation for Friday's non-farm payrolls is just 135K jobs).

The May Chicago PMI fell by more than expected to 52.7 from 56.2 in May. The indicator has plunged from over 60 in March, and now sits at its lowest level since September 2009. Most of the components of the survey also fell sharply.

UK GfK consumer confi dence rose slightly in May, from -31 to -29. This is the fi rst time in four months that sentiment has improved, but it remains much weaker than around the same time last year.