Currency market weekly review (February 17 - February 21, 2014)
Asian and European trading sessions:
Euro: Published this week macroeconomic statistics came out weak. However, euro was held by the fact that the figures remained in the growth zone. Though figures indicate a slowdown in the recovery of the European economy, but still, do not force the ECB to take drastic measures urgently.
On Tuesday: The euro exchange rate rose slightly against the U.S. dollar. After the initial reaction to the mixed results of ZEW, the pair was able to gain momentum and growth in the area to recover the maximum values. Analysts said that in recent years to assess the current situation has become a good leading indicator of GDP. In this sense, today's sharp rise in this component was the good news for the economy, which increased the likelihood that in the first months of this year, it should gain momentum. Recall that the report showed that the index of sentiment in the business environment fell in February to the level of 55.7 points compared to 61.7 points in January. Experts expected that the value of this indicator decrease only to the level of 61.3 points. However, despite the decline, the index remained well above its historical average level of 24.5 points. In addition, the data showed that the rate that evaluates opinion on the current economic situation rose to 50 points in February from 41.2 in January, reaching its highest level since August 2011. Expectations were at 44 points. We also add that for the euro zone sentiment index fell in the business environment 4.8 points and reached the level of 68.5 points. Meanwhile, the index of the current situation in the euro zone improved by 8 points - to the level of 40.2 points. The EUR / USD pair rose to $ 1.3737 during the European session.
On Thursday: The rate of the euro fell sharply against the U.S. dollar, which was associated with the release of data on PMI. The decline began after a report showed that private sector activity in France has declined at a faster pace in February, which stood at the head of a marked deterioration in service sector activity. On a seasonally adjusted composite index of activity that assesses the effectiveness of the manufacturing and service sectors, fell to two-month low in February, and were 47.6 points, compared to 48.9 points in January. Recall that the value of this index below 50 indicates a contraction in activity in the sector. Meanwhile, it became known that the purchasing managers' index for the manufacturing sector fell to 48.5 in February from 49.3 in the year. Economists expected the index to rise to 49.6. At the same time, the activity indicator for the service sector fell to 46.9, compared with 48.9 in January. Expectations were at 49.5.
Pressure was also provided by the data for the euro area, which showed that the private sector economy continued its expansion in February, increased this streak to eight consecutive months, but showed weaker results than predicted by many economists. According to the report, the composite index, which measures the efficiency in the manufacturing sector and services, totaled 52.7 points in February, which was slightly lower than January's 31 -month high at 52.9 points. Economists had expected the figure was 53.1 points. Studies also showed that the Purchasing Managers Index for the manufacturing sector fell to 53 points in February to 54 points in January. Expectations were at the level of 54.2 points. Meanwhile, the activity indicator in the service sector rose to 51.7 from 51.6 at the beginning of the year. Economists expected the index to rise to 51.9. The EUR / USD pair fell to $ 1.3685 during the European session.
U.S. Dollar: In many ways, the factor that pressed dollar this week was macroeconomic statistics from the U.S. The weakness of the U.S. housing market shows: NAHB Housing Market Index fell to 46 (expected it at 56). Decreased by 16 % m / m by housing starts , fell by 5.4% and the number of building permits issued , and fall showed sales in the secondary market ( -5.1 %) , which was the fifth fall in the last 6 months. Naturally, all this only reinforced concerns about the preservation of growth of the U.S. economy.
On Wednesday: The rate of the dollar was affected on the back of weak reports on the U.S. housing market. Housing Starts fell sharply last month, a sign of "cooling" in the housing market in the United States. Decline was mainly associated with abnormally cold weather in large parts of the country.
The report of the Ministry of Commerce said that in January, housing starts fell by 16% to a seasonally adjusted, while reaching 880 thousand units. The figure for December was revised upward to reach 1.048 million units. At the head of the January decline were single-family housing bookmarks, which decreased by 15.9 % - up to 573 thousand in annual terms. Meanwhile, the number of building permits, which is an indicator of future construction, fell 5.4% to a seasonally adjusted - up to 937 thousand, compared to a revised figure for December at the level of 991 thousand units. Economists forecasted that housing starts dropped to 943 thousand, and the number of building permits decreased to 973 thousand
On Thursday: The dollar came under slight pressure after the block statistics from the U.S. Recent data from the U.S. Labor Department showed that the number of applications for unemployment benefits fell slightly last week, which was another sign of improvement in the labor market. According to the report, the seasonally adjusted number of initial claims for unemployment benefits fell for the week ending February 15, 3 thousand, reaching at this level of 336 thousand last value was slightly higher than predicted by experts - at the level of 335 thousand, but still was lower than average at around 344 thousand for the whole of last year.
British Pound: The first disappointment was the data on the consumer price index. Figure the first time since November 2009 was below the target level of the Bank of England. Minutes of the last meeting of the Monetary Policy Committee has not brought anything interesting. The decision to keep it unchanged turned unanimous.
On Monday: The British pound retreated from four-year highs against the dollar reached on housing data. Housing prices in Britain have risen markedly in February, registering with the largest increase in the last seven years. This was stated in the data, which were released on site estate Rightmove. According to the report, average house prices across England and Wales increased in February to ? 251,964, which was 6.9 % higher than the same period last year, as demand from potential buyers continued to strengthen. Add that last jump was the highest (in annual terms) since November 2007. In addition, it was reported that prices in London rose by 11.2 % per annum, in connection with which the average price was at around ? 541,313. In the north- east cost of housing has risen by only 0.1 %, against which the average price was ? 142,372. In Wales, house prices rose by 2.3 % year on year, reaching ? 165,055 on average.
After several years of uncertainty, more people are thinking about moving. Over the past four weeks, the number of new homes that were for sale on the website, averaged 27,768 units, an increase of 18 % compared with the same period last year. Growing supply increases demand from buyers, which indicates that the number of homes sold in 2014 may be more than last year, according to Rightmove. The GBP / USD pair fell to $ 1.6718 during the European session.
On Tuesday: Pound dropped significantly against the dollar after data showed that the UK inflation rate last month fell below the target value of the Bank of England, which is fixed for the first time in the last four years. The latter result confirms the message from the Bank of England, there is no reason to raise interest rates.
According to the report, consumer prices rose by 1.9 % per annum in January, compared with an increase of 2.0 % in December, while showing the weakest growth since November 2009. Economists had expected inflation to remain at 2.0 %. Add that up to December last year, the annual inflation rate exceeded the target of the Bank of England at the level of 2 % every month since December 2009 , undermining the purchasing power of households and making greater decline in living political issue ahead of elections next year. The main measure of inflation, which excludes prices of energy, food, alcohol and tobacco, increased by 1.6 % in January compared with the same month last year and an increase of 1.7 % in December, recording the smallest increase since June 2009. Compared with the previous month, the CPI fell in January by 0.6 %, which was unchanged compared to December, and it turned out as expected. The GBP / USD pair fell to $ 1.6652 during the European session.
On Wednesday: Pound fell against the U.S. dollar, which was a reaction to the British report. Data that has been submitted by the Office for National Statistics showed that the UK labor market continued to strengthen in recent months in 2013 , in favor of which said revenue growth and a decline in the number of applications for unemployment benefits. However, an unexpected rise was recorded in the unemployment rate in the three months (December) compared with the previous three-month period. It serves as a reminder that the economic recovery is not as strong or balanced, says the Bank of England.
According to the report, the unemployment rate rose to 7.2 % in the three months (December), compared with 7.1% in the previous three months (November). However, the latter result was significantly lower than the 7.6% in the third quarter. It was also reported that the number of unemployed fell by 125,000 over the last three months of 2013. Increasing unemployment surprised economists, as they expected that this figure will remain the same.
Average growth of regular income , except for bonuses , in the three months to December rose by 1.0 % compared with 0.9 % in the previous three-month period , recording the largest increase since June last year . Moreover, it became known that the level of unemployment claims for employment fell in January to reach 3.6% from 3.7 % in December, showing the 15th consecutive monthly decline and reached its lowest level since December 2008. The GBP / USD pair fell to $ 1.6633 during the European session.
On Monday: The Japanese Yen lost scored during the Asian session positions against the dollar after data on GDP and industrial production. According to the report submitted by the Cabinet Office in Tokyo, annualized gross domestic product grew by only 1 % compared to the previous quarter. Thus, the figure fell short of the most pessimistic estimates of economists in 1.1%, while the average forecast assumed a 2.8% increase. The economic slowdown in Japan emphasizes the risks to recovery, especially before the rise of the sales tax in April to 8% from 5%. “Inevitably, the fact that the economy has weakened in the period from April to June because of the negative reaction to the demand," - said Yoshimasa Maruyama, chief economist at the Institute for Economic Research Itochu. Despite the fact that capital spending rose by the maximum value for two years, and consumption growth rose, external demand is still negatively affected GDP data. In January-March GDP growth is likely to accelerate, but some economists careful because higher wages cannot support the costs after raising taxes. Relatively weak exports could also have a negative impact on growth.
The volume of industrial production in Japan grew weaker pace in December than previously assumed. This was stated in the final data, which were presented today by the Ministry of Economy, Trade and Industry. According to the report, industrial production grew by 7.1 % in December compared with the same month last year, which was slightly less than the increase of 7.3 %, which was reported on January 30. However, growth in December was significantly higher than in November - at the level of 4.8 %. Seasonally adjusted industrial production rose by 0.9 % compared with the previous month. Recall that in November industrial output fell by 0.1 %. Preliminary data reported growth in December by 1.1 %. The USD / JPY pair rose to Y101.99 during the European session.
On Tuesday: The yen fell sharply earlier against the U.S. dollar, which was associated with the Bank of Japan's decision to increase the monetary base by 60-70 trillion yen (686 billion dollars). Central Bank doubled lending program until 7 trillion Yen to support the economy. This doubling of lending is seen as deep signal, meaning that the regulator is likely to further weaken the ready and their policy as it seeks to maintain liquidity volumes. In addition, the Bank of Japan extended periods of both programs for the year. Thus, the central bank kept the asset purchases unchanged, but decided to implement additional stimulus in the coming months. Regulator still aims to achieve the inflation target of 2 % and intends to achieve an economic breakthrough. The decision was taken by the members of the Monetary Policy Committee unanimously. The USD / JPY pair rose to Y102.73, and then retreated slightly during the European session.
Gold: The gold prices keep rising and near the peak of 3.5 months due to the weak dollar and concerns over global economic growth. The cost of the April gold futures on the COMEX today rose to $ 1332.40 per ounce.
On Wednesday: The yen rose against the U.S. dollar. This was associated with the release of the monthly report of the Bank of Japan. It says that the Japanese economy will continue to recover at a moderate pace in the near future, with the support of the further improvement of industrial production and foreign demand. The Bank of Japan, however, warned that economic growth will depend on the increase and subsequent decrease in demand before and after the increase in the consumption tax, which will be introduced in April this year. Adverse events in emerging markets, the European debt crisis and the pace of the U.S. economic recovery also pose risks to economic growth in Japan, according to the monthly report. Exports are expected to increase slightly, mainly to a recovery in overseas economies, says the Bank of Japan. At the same time, industrial production will continue to grow (albeit at a moderate pace) on a background of stability and strength of private consumption, investments in the housing market. The USD / JPY pair fell to Y101.86 during the European session.
On Thursday: The yen strengthened against all major currencies after the fall of the stock market of Asia. The negative on the stock market part of the publication of disappointing statistics on Chinese production. PMI from HSBC China fell to its lowest level in seven months and was 48.3, below the final data for January (49.5) and the average estimate of economists (49.5). The USD / JPY pair fell to Y101.66, then rose to Y102.10 during the European session.
Australian dollar: The Australian dollar fell after the publication of disappointing statistics on Chinese production. As it became known , the Chinese manufacturing index fell again in February , continuing progress on reducing the territory , reaching a seven-month low , and that was due to a fall in new orders , suggesting that the economic recovery is losing momentum .
On a seasonally adjusted preliminary purchasing managers’ index from Markit / HSBC, which measures activity in the manufacturing sector fell to 48.3 points in February, compared to 49.5 points in January? Economists had expected the index to fall to the level of 49.4 points. The index currently remained below 50 points for the second month in a row and is at its lowest level in seven months.
Swiss franc: The Swiss franc fell markedly against the dollar, which has been associated with risk aversion. The positive trade balance data could not help franc. As it became known, Switzerland’s trade surplus rose sharply in January, driven by an increase in exports of chemical and pharmaceutical products.
Swiss Franc: The Franc fell slightly against the U.S. dollar, as the report of Switzerland was worse than expected. Note that Swiss economic expectations retreated from the highest level in more than three and a half years in February, as financial analysts have become more cautious amid slowing growth in major export markets for the Alpine country. A study conducted by the ZEW Institute and Credit Suisse Group, showed that investors' expectations index fell to 28.7 points in February, compared to 36.4 points in January ( the highest since May 2010) . Recall, a positive value indicates that the number of participants who expect to improve the economic outlook is higher than the number of those who expect that they will deteriorate. While recent data from the ZEW contrasted with the Swiss PMI, increasing more than expected in January, and an early indicator of KOF, which rose to its highest level in two and a half years last month. They pointed out that economic growth in the euro area begins to support the demand for Swiss industrial goods , and it should stimulate the economy in the next six months.
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