DAILY FOREX REPORT FOR 27 AUGUST 2014

 MARKET HEADLINES

Rupee up 4 paise against the US dollar
The rupee recovered by four paise to 60.52 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the American currency by exporters. The local currency had lost 9 paise to close at 60.56 per dollar yesterday following late profit booking in local equities and fresh dollar demand from oil importers. Forex dealers said besides selling of the US currency by exporters, dollar's weakness against other Asian currencies overseas also supported the rupee but a lower opening of the domestic equity market capped the gains. Meanwhile, the benchmark BSE Sensex fell by 105.19 points, or 0.39 per cent, to 26,331.83 in early trade today. 

New Zealand dollar punished by weak data, Australia dollar more resilient
The New Zealand dollar plumbed six-month lows on Tuesday as a surprisingly large trade deficit provided speculators with a fresh excuse to sell, while its Australian cousin held its own in the face of a broadly stronger US dollar. The kiwi extended losses to as far as $0.8311, its weakest since late February. It was last at $0.8343 and has shed more than 5 cents since it hit a three-year peak in July. It moved a notch lower after data showing a larger-than-expected trade deficit in July highlighted the ongoing fall in dairy prices, the country's main export earner. The kiwi underperformed most major currencies, particularly the Aussie which hit a nine-month high around NZ$1.1170. Against a currency basket the kiwi fell to 78.52, its lowest since March and well below the Reserve Bank of New Zealand's quarterly projections."The kiwi is still strong, but the decline is reflecting a few things catching up with it," said ASB economist Chris Tennent-Brown. On the whole, he said, the New Zealand dollar is facing pressure from an on-hold policy stance by the central bank, and "dairy prices and the broader export outlook losing a lot of its gloss over the last six months." He sees the next target at $0.8242, a low hit in February, and below that the year's trough at $0.8052. Technical signs pointed to further selling after it broke support at $0.8353, the 61.8 per cent retracement of its February-July rally. The kiwi offered limited initial reaction to a statement from Standard Poor's reaffirming its sovereign rating and outlook on New Zealand. The Australian dollar was relatively stable at $0.9293 , having bounced from a low of $0.9272 in early trade. It has showed remarkable resilience in recent days against a broadly rising US dollar and remained well within the 92-95 cent band seen since March. Support was found at $0.9270, with resistance around $0.9315.

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