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Currency market weekly review (March 31 - April 04, 2014)

April 7, 2014, Monday, 14:20 GMT | 09:20 EST | 17:50 IST | 20:20 SGT
Contributed by Forex-Metal

Euro: -0, 36%

In details: The main influence on the euro was Mario Draghi comments following the meeting of the European Central Bank. The euro fell after ECB President Draghi did not rule out that the European regulator may implement quantitative easing program, while maintaining a long period of inflation.

Pressure on the euro at the beginning of the week had a weak data on inflation in the eurozone. As it became known, the annual inflation rate in the euro zone fell again in March, beating the average forecast with experts and reaching its lowest level since late 2009. The euro was supported by the data, which showed that manufacturing activity in the U.S. in March grew slightly more rapidly than the previous month. Also, its growth was associated with the release of data on European PMI. The PMI indices surpassed forecasts in Spain, Italy and France confirmed the forecast of the eurozone as a whole and not short of expectations in Germany. As it became known, the growth in the manufacturing sector slowed in the euro zone last month, and confirmed the experts' forecasts and initial estimates. There were also seen positive data on unemployment in Germany and the euro area. Report from the Ministry of Labor in Germany showed unemployment in the country has declined in March more than expected, underscoring the continuing improvement in Europe's largest economy. Meanwhile, unemployment in the euro area declined slightly in February, but, given the downward revision from the previous month to reach 11.9 percent from 12.0 percent, unchanged.

US Dollar:

In details: Dollar contributed to the growth of confident data on the U.S. labor market. As it was shown by recent data that were presented Automatic Data Processing (ADP), in March, private sector employment increased markedly, and came close to the predictive values. Strengthening of the dollar also contributed data on the growth of industrial orders in the United States. Factor in the growth in orders was supposed to economic recovery after the winter with bad weather conditions, because of which there is a delay before. Some support to the dollar was data showing that in March the index of business activity in the U.S. service sector, calculated by the Institute for Supply Management (ISM), increased slightly, reaching the level of 53.1 while compared with the February reading at around 51.6.

British Pound: -0, 38%

In details: Pound fell amid weak data on activity in the manufacturing sector. The increased activity in the British manufacturing sector slowed sharply in March, while showing the slowest pace in eight months, which was associated with a drop in purchase prices. In turn, the index of business activity in the construction sector from Markit / CIPS fell in March to a level of 62.5 points from 62.6 in February, but remained near the maximum for the last 6.5 years, which was recorded in January (64.6 points). Put pressure on the pound and a report from the Nationwide Building Society, which showed that house prices rose in March by 9.5 percent (yoy), after rising 9.4 percent in February. The latest increase was slightly less than the experts' forecasts at 9.7 percent, but was the highest since May 2010, when prices rose by 9.8 percent. On Thursday, the pound fell against the dollar, which was associated with the release of weak UK data. As it became known, the services sector continued to expand in the UK last month, indicating that the sustained economic growth in the first quarter, although the pace of this growth was the slowest since June last year.

Japanese Yen: -0, 46%

In details: To weaken the yen have had their own reasons. First, Consumption tax in Japan was raised to 8 % from 5 % on Tuesday. Bank of Japan Tankan report pointed to expectations of a sharp deterioration in sentiment this year. Then, a statement of the Bank of Japan confirmed that until the release of the incentive program cannot be considered. Also, this increase in the sales tax from April 1, could adversely affect the economic performance. Finally, index data Tankan reflected worsening outlook for business activity for large manufacturers and service providers. Japanese currency recovered slightly against the background data on employment in the U.S. non-farm payrolls.