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DAILY FOREX REPORT FOR 1 AUG 2014

MARKET HEADLINES

 Dollar boosted by strong US growth
The dollar pushed higher against other major currencies on Wednesday helped by a stronger-than-expected initial estimate for second-quarter US economic growth. The Commerce Department reported the economy rebounded to a 4.0 per cent growth pace in the April-June period after the sharp contraction of the first quarter, caused largely by extremely severe winter weather across most of the eastern half of the country. That sent the dollar up to $1.3367 per euro, its highest level since November, before settling at $1.3395. It also jumped to 103.09 yen, and to $1.6890 per pound, before slightly paring those gains. Hours after the economic growth report the Federal Reserve issued a fresh monetary policy statement that, as expected, made no fundamental changes to its course on tapering the stimulus and held the federal funds rate at its near-zero level. The Fed expressed continued concern about weaknesses in the labor market, but in a slight change in language it acknowledged the rise in
inflation, but saw no major threat. Jens Nordvig of Nomura said the Fed’s statement suggests possible changes to policy that would be bullish for the dollar if jobs data strengthens and inflation picks up as expected in the coming months.

 Sterling stuck at six-week lows against dollar
Sterling was rooted to its lowest in six weeks against the dollar on Wednesday, with events in the United States later in the session expected to be the best bet for fresh direction after two weeks of solid gains for the US currency. The pound is in negative territory for a fourth straight week, adding to a sense that its year-long rally, against the dollar at least, has stalled after hitting strong resistance at $1.71. The pound touched a new six-week low of $1.6928 in European morning trade, off less than 0.1 per cent on the day. The International Monetary Fund ( IMF) this week joined a chorus of voices questioning the value of sterling. After an 11 percent gain against a basket of currencies over the past year, it said the pound was overvalued by 5 to 10 per
cent. With the domestic data calendar light, whether the British currency falls further this week is likely to depend chiefly on US numbers, starting with second quarter gross domestic product and the ADP jobs report on Wednesday. “I’ve thought the market was over-egging the chances of a UK rate hike this year and I’m probably in a minority in thinking they could even wait until after the second quarter of next year,” said Neil Mellor, a strategist with BNY Mellon in London. “The fact that the Bank of England is concerned that wage growth is lagging the recovery is something the market is taking note of. I still think sterling goes higher. But this is a case of disappointment just for the moment.

DAILY I FOREX REPORT FOR 31 JULY 2014

DAILY CURRENCY UPDATE

USD/CHF almost unchanged near 5-month highs
The U.S. dollar was almost unchanged against the Swiss franc on Thursday, hovering close to five-month highs as Wednesday’s upbeat U.S. data continued to support the greenback.

USD/CHF hit 0.9094 during late European morning trade, the session high; the pair subsequently consolidated at 0.9091, inching up 0.04%.

The pair was likely to find support at 0.9037, the low of July 29 and resistance at 0.9107,  Wednesday’s high.

The dollar strengthened broadly on Wednesday after official data showed that U.S. gross domestic product expanded at an annual rate of 4.0% in the three months to June,  outstripping forecasts of 3.0%.

In addition, the contraction in the first quarter was revised to 2.1% from a previously reported 2.9% contraction.

But the greenback’s gains were held in check after the Federal Reserve’s latest rate statement said that considerable slack still remains in the labor market, despite the recent improvement in jobs growth, and that rates will remain on hold for longer.

The central bank also said inflation is rising and was moving closer to its long-term target.

The Swissie was steady against the euro, with EUR/CHF dipping 0.02% to 1.2169.

Also Thursday, Eurostat reported that the annual rate of inflation in the euro area slowed to a five year low of 0.4% in July from 0.5% in June. Economists had expected an  unchanged reading.

Euro steady against dollar, yen after CPI, jobs reports
The euro was little changed against the dollar and the yen on Thursday after preliminary data showed that the annual rate of euro zone inflation slowed in July and

another report showed that the region’s unemployment rate fell to an eleven-and-a- half month low in June.

EUR/USD was trading at 1.3395 following the release of the data, not far from the eight-month trough of 1.3366 reached on Wednesday.

The pair was likely to find support at around 1.3350 and resistance at 1.3425.

The single currency showed little reaction after Eurostat reported that the annual rate of inflation in the euro area slowed to a five year low of 0.4% in July from 0.5% in June.

Economists had expected an unchanged reading.

Falling energy prices, as well as declines in the cost of food, alcohol and tobacco pushed down the inflation rate.

Core inflation, which excludes food and energy costs was unchanged at 0.8%.

The weak data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.

FOREX DAILY REPORT 30 JULY 2014

MARKET HEADLINES

 Rupee down 2 paise against dollar in early trade
The rupee trimmed its initial losses and recovered by two paise to 60.08 against the American currency in late morning deals following bouts of dollar selling by banks and exporters. The rupee resumed lower at 60.12 per dollar at the Interbank Foreign
Exchange (Forex) from last Friday’s closing level of Rs 60.10 per dollar. It gained later and was quoting at 60.08 per dollar at 1020 hours. The domestic unit moved in a range of 60.08 and 60.13 per dollar during the morning trade. In New York, the dollar was up last Friday against its major rivals following weak German economic data. Meanwhile, the benchmark 30-share index Sensex declined by 53.28 points, or 0.20 per cent, to 26,073.47 at 1030 hours.

 China’s yuan rises as positive economic data offsets weak midpoint
China’s yuan strengthened against the dollar on Monday, as better-than-expected economic data offset a weaker central bank midpoint fixing, traders said, as the spot market continued to push the traded rate closer to the midpoint. Spot yuan stood at 6.1870 per dollar by midday, up 0.07 per cent from last Friday’s close, only 0.4 per cent away from the midpoint, the closest the spot market and the midpoint have been since mid-March. The People’s Bank of China (PBOC) set its official midpoint weaker for the fourth day on Monday, at 6.1622 per dollar, down 0.04 per cent from last Friday. The central bank widened the trading band – the range within which the spot rate may trade away from the midpoint on any given day – to 2 per cent from 1 per cent on March 15, after putting the currency on a sharp depreciation trend. That helped flush speculators out of the market but also made traders highly conservative, with the spot rate trading consistently far weaker than the midpoint ever since. However, while the yuan has been appreciating steadily since July 21, traders don’t believe the PBOC is ready to tolerate another major rally; thus the spot rate has grown closer to the
midpoint because it has been held relatively flat in recent weeks in the face of developments. “Better-than-expected HSBC preliminary PMI data helps boost the yuan, but the central bank doesn’t want the currency to appreciate too fast,” said a trader at a Australian bank in Shanghai. China’s factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed last Thursday. “The yuan has broken the psychologically key 6.20 level and it will float in the range of 6.18 to 6.20 in the short term if a trend of appreciation can be established,” the trader said. “The PBOC is unlikely to intervene as obviously as it did in the past.”

DAILY I FOREX REPORT FOR 28 JULY 2014

DAILY CURRENCY UPDATE

Dollar index steady near 6-month highs
The dollar was trading close to six month highs against a basket of other major currencies as investors positioned ahead of a series of key economic events later in the week.

Demand for the dollar continued to be underpinned, following strong gains last week, ahead of the latest U.S. employment report later in the week and the upcoming Federal Reserve statement on Wednesday. Investors were also awaiting final data on U.S. second-quarter growth on Wednesday.

Earlier this month Fed Chair Janet Yellen said that rates could rise sooner if the recovery in the labor market continued.

EUR/USD was trading at 1.3432, hovering just above Friday’s eight month lows of 1.3420.

The euro remained under pressure after weak German economic data on Friday underlined concerns over the divergence in monetary policy between the European Central Bank and its major peers.

The euro zone was to release what would be closely watched data on consumer prices on Thursday, amid concerns over persistently low levels of inflation in the currency bloc.

The dollar was almost unchanged against the yen and the Swiss franc, with USD/JPY inching up 0.05% to 101.88 and USD/CHF at 0.9046.

NZD/USD drops to 1-1/2 month lows on U.S. data
The New Zealand dollar dropped to one-and-a-half month lows against its U.S. counterpart on Monday, as Friday’s upbeat U.S. durable goods data continued to lend support to the greenback.

NZD/USD hit 0.8534 during late Asian trade, the pair’s lowest since June 11; the pair subsequently consolidated at 0.8539, shedding 0.19%.

The pair was likely to find support at 0.8494, the low of June 10 and resistance at 0.8586, the high of July 25.

The greenback remained supported by better than expected data on U.S. durable goods orders for June.

The Commerce Department on Friday reported a rise of 0.7% in orders of long lasting goods such as machinery and electronic products, compared to forecasts of 0.5%.

The kiwi came under broad selling pressure last week after the Reserve Bank of New Zealand its benchmark interest rate to 3.50% from 3.25%, but signaled that rates will not go any higher this year.

Market participants were eyeing the U.S. employment report due later in the week and the upcoming Federal Reserve statement expected on Wednesday. Investors were also awaiting final data on U.S. second-quarter growth on Wednesday.

The New Zealand dollar was lower against its Australian counterpart, with AUD/NZD adding 0.17% to 1.1000.

Later in the day, the U.S. was to release data on pending home sales.

DAILY I FOREX REPORT FOR 25 JULY 2014

DAILY CURRENCY UPDATE

Dollar remains broadly supported by U.S. jobless data
The dollar remained broadly higher against the other major currencies on Friday, as Thursday’s upbeat U.S. jobless claims data continued to support demand for the greenback.

The U.S. Department of Labor reported on Thursday that the number of individuals filing for initial jobless benefits in the week ending July 19 declined by 19,000 to an more than eight-year low of 284,000, from the previous week’s total of 303,000.

The data fuelled speculation over the timing of a possible rate hike by the Federal Reserve.

EUR/USD remained near six-month lows at 1.3449.

The Ifo Institute for Economic Research earlier reported that its German business climate index fell to a nine-month low of 108.0 this month, from a reading of 109.7 in June. Analysts had expected the index to tick down to 109.4 in July.

A separate report showed that the Gfk German consumer climate index rose to a seven- and-a-half year high of 9.0 this month, from a reading of 8.9 in June. Analysts had expected the index to remain unchanged in July.

Elsewhere, the dollar was higher against the yen and the Swiss france, with USD/JPY up 0.10% to 101.91 and with USD/CHF adding 0.14% to 0.9038.

In Japan, official data earlier showed that consumer price inflation rose 3.6% in June from a year earlier, after a 3.7% gain the previous month.

Excluding fresh food, Japan CPI rose 3.3% in June from a year earlier, in line with expectations, after a 3.4% increase in May.

GBP/USD almost unchanged after U.K. GDP report
The pound was almost unchanged against the U.S. dollar on Friday, trading near one- month lows as U.K. economic growth data came in in line with expectations, while

Thursday’s upbeat U.S. jobless claims data continued to support the greenback.

GBP/USD hit 1.6968 during European morning trade, the session low; the pair subsequently consolidated at 1.6973, dipping 0.06%.

Cable was likely to find support at 1.6924, the low of June 18 and resistance at 1.7053, Thursday’s high.

Preliminary data showed that U.K. gross domestic product rose 0.8% in the second quarter, in line with market expectations.

Meanwhile, the dollar remained supported after data on Thursday showed that U.S. jobless claims fell to the lowest level in more than eight years last week.

The U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending July 19 declined by 19,000 to 284,000, from the previous week’s total of 303,000.

The data fuelled speculation over the timing of a possible rate hike by the Federal Reserve.

DAILY FOREX REPORT FOR 24/07/2014

MARKET HEADLINES

Dollar firms, euro cracks under rates pressure
The dollar held close to a six-week peak against a basket of currencies in Asian trade on Wednesday, as the euro edged down to touch a fresh 2014 low on the diverging interest rate outlook for the US and euro zone. The dollar index, which tracks the greenback against a basket of six major rivals, was steady on the day at 80.773, not far from a Tuesday high of 80.837 touched on expectations that higher US interest rates are on the horizon. Data issued on Tuesday showed US inflation was 0.3 per cent in June, in line with most analysts’ forecasts, though core inflation, excluding volatile food and energy prices, was just 0.1 per cent, about half of what analysts had forecast. Despite the weaker-than-expected core inflation reading, market expectations that the US Federal Reserve is on track to continue tapering its bond purchase programme and then raise interest rates in the latter half of 2015 remained intact. “The US will raise next year, while in Europe, by contrast, we might see more easing steps,” Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo. The euro languished at multi-month lows against many of its peers, having moved decisively lower in the previous session with an eye-catching fall in the Swiss franc. The weaker euro dovetailed with expectations for the European Central Bank to ease policy further. The common currency was treading water at $1.3465 after touching a fresh eight-month low against of $1.3458 earlier, while it also slipped about 0.4 per cent against the Australian dollar to A$1.4271.

Euro hit by concerns over tougher Russia sanctions, diverging rate outlook

The euro hit an eight-month low against the dollar on Wednesday as worries over
tougher sanctions on Russia and their potential impact on fragile euro zone growth drove investors away from the single currency. The euro also fell against sterling, which was supported ahead of the latest minutes from the Bank of England’s Monetary Policy Committee, due at 0830 GMT. Markets will be looking for any signs of when an interest rate hike might come, with any move to a more hawkish tone likely to boost sterling further. The Australian dollar rose over half a per cent against the US dollar, boosted by a higher-than-expected reading of a key gauge of underlying inflation in June, denting market speculation of future rate cuts. The euro’s weakness was broad-based, dropping to its lowest in nearly two years against the British pound. The single currency fell to 78.83 pence, its lowest since August 2012. Against the dollar, the euro fell to $1.3455, its lowest since November 2013, with investors eying more losses in coming days. The euro was down 0.2 per cent against the yen at 136.45 yen, trading near its lowest in more than five months.

DAILY I FOREX REPORT FOR 24 JULY 2014

DAILY CURRENCY UPDATE

Sterling hits 1-month lows after U.K. retail sales report
The pound fell to one month lows against the dollar on Thursday after official data showed that U.K. retail sales rose less than expected in June.

GBP/USD was down 0.18% to 1.7014, the lowest since June 26, from around 1.7040 ahead of the data.

Cable was likely to find support at around the 1.70 level and resistance at 1.7052 the session high.

The drop in the pound came after the Office for National Statistics said retail sales rose just 0.1% in June from a month earlier, falling short of expectations for a 0.3% increase.

On a year-over-year basis, retail sales rose 3.6% in June, below expectations for a 3.9% gain, after rising at an annual rate of 3.7% in May.

In the three months to June, retail sales rose 4.5% year-over-year. It was the fastest quarterly increase in 10 years, the ONS said, indicating that the U.K.’s consumer driven recovery is continuing.

The pound rallied to six-year highs against the dollar earlier this month amid growing expectations that the deepening economic recovery in the U.K. will prompt the Bank of England to hike rates before the end of the year.

But the dollar was boosted after Federal Reserve Chair Janet Yellen indicated late week that rates could rose sooner if the recovery in the U.S. labor market continues.

The pound was also lower against the euro, with EUR/GBP rising 0.28% to 0.7922, pulling back from Wednesday’s 22 month lows of 0.7873.

Euro off lows after euro zone PMI data

The euro recovered from eight month lows against the dollar on Thursday after private sector data indicated that economic growth in the euro zone rebounded in July.

EUR/USD edged up 0.07% to 1.3471, from around 1.3438 ahead of the data, the weakest since November 21.

The pair was likely to find support at around the 1.3400 level and resistance at 1.3500.

The euro found support after a report showed that the preliminary reading of the euro zone manufacturing purchasing managers’ index rose to a two-month high of 51.9 from 51.8 in June.

The bloc’s services PMI jumped to a 38-month high of 54.4 from 52.8 in June.

The German manufacturing PMI rose to 52.9, up from 52.0 last month and the service PMI rose to a 37 month high of 56.6 from 54.6 in June.

The French manufacturing PMI fell to a seven month low of 47.6 from 48.2 in June but the country’s services PMI rose into positive territory, climbing to 50.4 from 48.2 in June.

The euro remained under pressure amid concerns that a fresh round of sanctions against Russia could have a negative impact on the growth outlook for the region.

The diverging monetary policy path between the European Central Bank and other central banks has also weighed on the single currency since the ECB cut rates to record lows on June 5, in a bid to stave off the threat of deflation in the euro area.

FOREX REPORT FOR 23/07/2014

MARKET HEADLINES

 Rupee ends little changed; fund flows in focus
The rupee ended flat, continuing a pattern of holding in tight ranges, with trading dominated by dollar sales from foreign banks but offset by solid greenback demand from oil companies and other importers. Higher shares also continued to underpin sentiment, with indexes gaining for a fifth consecutive session amid continued buying by foreign investors. Overseas funds were net buyers for a third consecutive session on Friday with purchases of $97.56 million despite concerns about escalating tensions between Russia and the West. “There is a strong foothold for the INR at 60 levels. There are no domestic triggers which can push the rupee sharply higher or lower from here. Market is now keen to see how the government delivers on its budget estimates,” said Naveen Mathur, associate director, commodities and currencies at Angel Broking. The partially convertible rupee closed at 60.30/31 per dollar compared with 60.28/29 on Friday. The unit moved in a tight range of 60.1650 to 60.32 range during the session. Traders said gains in other Asian currencies versus the dollar also aided sentiment for the rupee. Most Asian currencies rose on Monday, with the Thai baht touching a seven-month high, as investor risk aversion showed signs of easing, although market players remained cautious about geopolitical risks. In the offshore non-deliverable forwards, the one-month contract was at 60.60 while the three-month was at 61.13. FACTORS TO WATCH * Euro recovers against dollar; yen supported as stx slip * Asian currencies rise, baht hits 7-month high * Asia stcks
mostly higher, optimistic on US earnings * Foreign institutional investor flows * For data on currency futures.

 China’s yuan edges up in narrow trade, outlook firms
China’s yuan edged up on Tuesday, holding in a narrow range due to a lack of trading cues, with the overall market shifting to a more positive outlook on the currency for the rest of the year. Spot yuan stood at 6.2068 per dollar in midday trade, slightly
stronger than Monday’s close of 6.2089. It weakened 0.1 per cent last week against the dollar as a rising bout of global risk aversion forced investors to flee to the relative safety of the U.S. currency. The People’s Bank of China ( PBOC) fixed its official rate at 6.1544 per dollar, largely unchanged from Monday’s fixing of 6.1547. “It feels like there is a little more good news on the growth side and the yuan remains a higher yielding currency in the current landscape, so it should recover from the current levels. But importers are still unhedged so any gains are likely to be slow,” said Ju Wang, a senior FX strategist at HSBC. Recent data has shown that the
economy is on a firmer footing than in early 2014. Second quarter GDP was at 7.5 per cent while trade data showed a marked improvement in June, with officials expecting further growth. China’s bonds offer higher yields than other sovereign debt. Ten-year China debt offers a yield of 4.3 per cent while 10-year U.S. Treasuries offer 2.47 per cent and comparable German debt yields 2.57 per cent.

DAILY I FOREX REPORT FOR 22/7/2014

DAILY CURRENCY UPDATE

GBP/USD almost unchanged, geopolitical tensions weigh
The pound was almost unchanged against the U.S. dollar on Tuesday, as positive U.K. public sector borrowing data lent some support but concerns over geopolitical tensions in Ukraine and the Middle East continued to weight.

GBP/USD hit 1.7059 during European morning trade, the session low; the pair subsequently consolidated at 1.7068, dipping 0.04%.

Cable was likely to find support at 1.7037, the low of July 18 and resistance at 1.7118, the high of July 18.

Official data earlier showed that U.K. public sector net borrowing rose by £9.5 billion in June, after an increase of £11.9 billion in May, whose figure was revised from a previously estimated £11.5 billion.

Analysts had expected public sector net borrowing to rise by £10.3 billion last month.

Dollar mostly higher vs. rivals as global concerns persist
The dollar was mostly higher against the other major currencies on Tuesday, as concerns over tension in Ukraine and ongoing violence in the Gaza Strip continued to support safe haven demand.

EUR/USD shed 0.27% to 1.3487, as tensions between Russia and the West remained high in the wake of the downing of a Malaysian airliner in eastern Ukraine late last week, while Israel’s ground offensive in Gaza was also in focus.

Markets turned their attention to a meeting of euro zone foreign ministers later on Tuesday to discuss further sanctions against Russia.

The pound was steady against the dollar, with GBP/USD down 0.06% to 1.7065.

NZD/USD slips lower in cautious trade
The New Zealand dollar slipped lower against its U.S. counterpart on Tuesday, as market sentiment remained under pressure amid mounting tensions in Ukraine and violence in the Middle East.

NZD/USD hit 0.8673 during late Asian trade, the pair’s lowest since July 18; the pair subsequently consolidated at 0.8681, easing 0.10%.

The pair was likely to find support at 0.8654, the low of July 18 and resistance at 0.8720, Monday’s high.

Markets were jittery as tensions between Russia and the West remained high in the wake of the downing of a Malaysian airliner in eastern Ukraine late last week, while Israel’s ground offensive in Gaza was also in focus.

The kiwi was lower against the Australian dollar, with AUD/NZD rising 0.32% to 1.0821.

Also Tuesday, Reserve Bank of Australia Governor Stevens said he is content with the current monetary policy setting and stands ready to do more if needed.

Mr. Stevens was speaking at a conference in Sydney.

Later in the day, the U.S. was to release reports on consumer price inflation and existing home sales.

FOREX REPORT FOR TODAY 22/07/2014

MARKET HEADLINES

Major currencies eerily calm as geopolitical risk lingers

The dollar got off to a steady start on Monday as some calm returned to markets following an initial bout of risk aversion stemming from a flare up in geopolitical tensions. The downing of a Malaysian airliner in eastern Ukraine last week and fighting in Gaza still dominated the headlines, but developments over the weekend did not bring any fresh jitters. The dollar index was unchanged at 80.513, having retreated from a one-month peak last Friday when the euro bounced off a five-month trough of $1.3491. Traders said buying interest below $1.3500 helped squeeze the euro higher. The common currency should see solid support at $1.3460/80, an area that had provided a floor on several occasions in the past 10 months or so. The calmer market mood kept the safe- haven yen pinned down. The greenback was at 101.35 after rebounding from a one- week low of 101.09. The euro stood at 137.14 yen, off a five-month trough of 136.71. “Our sense remains that at least for the moment, markets will likely continue to treat geopolitical events as localized risks and not “macro” destabilising events,” analysts at JPMorgan wrote in a note to clients. The Antipodean currencies also recovered some of their recent losses, with the New Zealand dollar briefly popping above 87 US cents in early trade from Friday’s low of $0.8649. New Zealand’s central bank is widely expected to lift its cash rate to a 5-1/2 year high of 3.5 per cent on Thursday, but some analysts suspect the central bank will signal a pause to the tightening cycle. With Japanese financial markets closed on Monday for a public holiday, traders suspect the major currencies will traipse in a narrow range. There is no key economic data out of Asia.

South Korea won rises, stocks touch a 2014 peak before endingflat

The South Korean won edged up on Monday as foreign investors sold dollars as worry about global geopolitical tensions appeared to ease, while stocks ended flat. The local currency closed up 0.26 percent at 1,026.8 against the dollar versus Friday’s close of 1,029.5. The won was at its strongest in five days. The Korea Composite Stock Price Index (KOSPI) was quoted at 2,018.50 points at the end of Monday’s session, down 0.05 percent from Friday’s onshore close at 2,019.42. The KOSPI reached its year-to- date high of 2,030.61 before midday but reversed earlier gains as the session wore on in the absence of major cues. Institutions sold a net 134 billion won ($130.53 million) of KOSPI shares, selling for 15 consecutive sessions and edging out gains from foreign investors, who purchased a net 177 billion won ($172.41 million). LG Chem LtdBSE 0.00 % fell 4.2 percentages after a 43 percent decline in second quarter earnings was announced on Friday.