EURO discounts Greece pressures

Confidence in the euro zone's economy slipped slightly in April but business morale improved and household expectations of rising prices suggested that the threat of deflation may have been overcome.

The draft bill was not expected to include major novelties beyond measures already discussed with EU and IMF lenders, but Athens is hoping it will speed up slow-moving talks and permit at least an initial deal to ease its searing cash crunch.

Outlook: We expect EURINR is likely to trade on the positive note on the back of Greece's government reshuffled its bailout negotiating team.

Derivatives watch:

There is a little skeptism that EUR/INR or EUR/CNH may have seen the lows of the cycle, but rather that there is good value from a risk/reward perspective in (1) raising FX hedge ratios and (2) extending the duration of those hedges. We see bull rally remains intact though correction mood in early session tomorrow. Hence, speculators can add necked long positions on EUR/INR futures for extraction of leverage.