TODAY FOREX REPORT FOR 19 AUGUST 2014

MARKET HEADLINES
 

Rupee recovers 17 paise against the US dollar
The rupee rebounded by 17 paise to 61.04 against the dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the American currency by exporters and banks. Besides, the dollar's weakness against other currencies overseas and a higher opening in the domestic equity market also supported the rupee, forex dealers said. The rupee had fell 13 paise to end at 61.21 against the American currency in yesterday's trade following fresh dollar demand from importers, amid uptick in retail inflation and slowing industrial production growth. Meanwhile, the benchmark BSE Sensex rose by 56.03 points, or 0.22 per cent, to 25,974.98 in early trade today.

Pound hits 4-month low after BoE's dovish shift, euro eyesGDP
Sterling set a fresh four-month low on Thursday, staying on the defensive after the Bank of England surprised investors the previous day by signalling it was in no hurry to raise interest rates. The pound touched a low of $1.6668, its lowest level since mid- April, and down 3 per cent from a near six-year high of $1.7192 touched in mid-July. It last traded at $1.6680, down about 0.1 per cent on the day. Wrong-footing the market again, Governor Mark Carney indicated on Wednesday that wage developments would be key to the exact timing of a rate move as the BOE slashed its forecast for wage growth. Yet just a few months ago, Carney made sterling jump by warning investors that they were not sufficiently pricing in the chance of an early increase in record-low rates. Given the shift in Carney's comments, it may be difficult to find reasons to buy the pound, said Masafumi Yamamoto, market strategist for Praevidentia Strategy in Tokyo. "I think we could start to see people chase the current
momentum and aggressively build short positions," he said. Sterling could eventually drop to levels around $1.6500, Yamamoto said, adding that the pound's recent retreat was probably mainly due to profit-taking. One possible support level for sterling now lies at $1.6664, its 200-day moving average. The setback in the pound helped support the dollar versus a basket of major currencies. The dollar index edged up 0.1 per cent to 81.653, not far from an 11-month high of 81.716 set last week . Against the yen, the dollar edged up 0.2 per cent to 102.60 yen. The dollar has bounced back after hitting a two-week low of 101.51 yen late last week, when the safe-haven yen rose as geopolitical tensions sapped risk appetite.

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