DAILY FOREX REPORT FOR 22 AUGUST 2014

MARKET HEADLINES
 

Rupee extends losses; broad dollar rally post Fed minutes aids
Rupee trading at 60.77/78 versus its close of 60.61/62 on Wednesday. The US dollar trades at 11-month highs against a basket of major currencies after minutes of the Federal Reserve's July meeting sound slightly hawkish. Dollar's index versus six majors up 0.05 per cent. Traders will monitor flows into the debt and share markets for direction. Shares trading down 0.07 per cent.

Dollar hits 11-month high, stays firm after solid housing data
The dollar touched an 11-month high against a basket of major currencies on Wednesday after positive US housing data the previous day fed hopes that the world's biggest economy is strengthening. The dollar index surged to as high as 81.995, its highest level since September. It last stood at 81.974, up 0.1 per cent on the day. The greenback rose broadly, sending the euro to a nine-month low, while the New Zealand dollar slid below support at levels near $0.8400 and fell to its lowest level in more than five months. The dollar also scaled four-month highs against yen and the British pound. The dollar was boosted by the release of data on Tuesday showing US housing starts and building permits rebounded strongly in July, suggesting the housing market recovery was back on track after stalling in the second half of last year. "There seems to be some dollar-buying on the back of a rise in US yields," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. The US 10-year Treasury yield last stood at 2.407 per cent , having edged up over the past few days from a 14-month low of 2.303 per cent set last Friday. Some market participants said the greenback's rise had more to do with weakness in other major currencies, with the euro staying on the defensive, while sterling extended its losses after weaker-than-expected inflation data the previous day eased pressure on the Bank of England to raise interest rates. The euro fell 0.1 per cent to $1.3306, having touched a low of $1.3303, its lowest level since last November. Against the yen, the dollar rose 0.2 per cent to 103.15 yen . It touched a high of 103.23 yen earlier on Wednesday, the dollar's strongest level since April.

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