DAILY FOREX REPORT FOR 01 JULY 2014

MARKET HEADLINES
 

Rupee slips below 60.00 on central bank intervention
Rupee was trading at 60.05/06, sliping beow from the session low of 60.00 after state-run banks purchased dollars on behalf of the central bank, dealers said. The pair had closed at 60.0850/0950 on Friday. Demand for the greenback from oil refiners looking to meet month-end demand was also expected to limit any sharp upside on the pair. Rupee had earlier been under pressure in line with gains in other Asian currencies due to views that the U.S. Fed is unlikely to raise interest rates soon after disappointing economic data. The pair is seen holding in a 59.80 to 60.20 range during the session.

Euro traders eye inflation, ECB, BNP fine
The euro traded flat against the dollar in early European Monday trade, with investors' eyes on a first estimate of euro zone inflation for June ahead of the European Central Bank's monthly meeting on Thursday. No action is expected from the ECB this week but the euro has been creeping higher since mid-June, retaking some of the ground lost after the bank took steps to pump yet more money into the economy a month ago. All of the broader market and economic trends that have supported the single
currency this year remain intact but many analysts are again pointing towards growing momentum in the US economy, despite disappointing growth numbers last week. There is also talk amongst dealers of the impact of a large fine expected on BNP ParibasBSE -1.60 % from US authorities that could force the French bank to exchange billions of euros for dollars. "There is a debate going on about the extent to which they have hedged this deal," said a London-based strategist with one large European bank. "They may well have a lot of it already. They do have a US business, but it does look like a lot of money that might have at least a temporary impact on the euro." Sources familiar with the matter told Reuters over the weekend that US Justice Department was expected to announce a settlement with BNP involving a record fine of nearly $9 billion over alleged US sanctions violations. Another fine a month ago, on Swiss bank Credit-Suisse, shocked the dollar higher against the franc. The dollar has been in weak form in recent weeks and was still close to a more than one-month low against a basket of
major currencies on Monday. Some backward-looking US data last week gave investors no reason to expect higher US interest rates anytime soon. This week, all eyes are on non-farm payrolls figures due a day earlier than usual on Thursday, expected to show the creation of another 210,000 jobs in the past
month.

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