DAILY FOREX REPORT FOR 02 SEPTEMBER 2014

MARKET HEADLINES
 

Pound pares gains, gilts rise after UK factory data misses forecasts
Sterling pared gains against the dollar and euro on Monday, while bond futures gave up losses, after data showed activity in the UK's manufacturing sector slowed by more than expected in August. The pound fell to $1.6627 after the data, from $1.6645 beforehand, still leaving it 0.2 percent up on the day. The euro rose from a five-week low of 78.92 pence to trade at 79.03 pence. The Markit/CIPS UK
Manufacturing Purchasing Managers' Index (PMI) fell to 52.5 in August - its lowest level since June last year and below all forecasts in a Reuters poll - from July's downwardly revised 54.8. Separate data showed signs of moderation in the housing sector, as British mortgage approvals fell slightly in July. British government bond futures FLGcv1 pared some of their losses, gaining about five ticks to 113.47. The FTSEurofirst 300 index of pan-European shares turned negative after the UK data to trade 0.1 percent lower at 1,372.49 points at 0834 GMT.

Forex reserves fall to $318.58 billion as of August 22: RBI
India's foreign exchange reserves fell to $318.58 billion as of Aug. 22, compared with $319.39 billion a week earlier, the Reserve Bank of India said on Friday. Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves, the RBI said in its weekly statistical supplement. Foreign exchange reserves include India's Reserve Tranche position in the International Monetary Fund.

Dollar claws back losses in Asia
The dollar edged up in Asian afternoon trade Friday recovering from losses in the morning that were fanned by fears of a possible Russia-Ukraine military conflict and offset upbeat US economic growth data. The greenback rose to 103.82 yen, up from 103.70 yen earlier in the day and 103.75 yen in New York late Thursday. The euro was at 136.74 yen from 136.75 yen, while it bought $1.3171 from $1.3181. The dollar's gains against the yen were partly driven by Japanese importers buying the currency before month end, dealers said. Some market participants also bought back the greenback as Russian President Vladimir Putin called on pro-Moscow separatists in Ukraine to allow Ukrainian troops to escape from the rebel-held eastern town of Novoazovsk. Investors had shifted into the yen, seen as a safe-haven currency during times of turmoil and uncertainty, following reports that more than 1,000 Russian troops entered Ukraine, supporting pro-Moscow separatist rebels fighting Kiev.

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