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The euro fell sharply against the dollar, dropping below the level at the time of $ 1.30, which was the first time in two months after a report published today showed that activity in the manufacturing sector continued to decline, while the unemployment rate has reached a record high. Note that the EU statistical agency Eurostat reported that the unemployment rate in the euro area in January was 11.9%. This is the highest value for the 17 countries in the currency bloc to start keeping statistics in 1995. Value is higher than the January December, which, after an upward revision was 11.8%. Meanwhile, according to preliminary data, Eurostat, annual inflation in the euro area in February was 1.8% versus 2.0% in January. This is the lowest level since August 2010. Inflation is currently below the target level of the European Central Bank, which is just below 2.0%. In addition, note that the single currency is now on his way to his fourth consecutive weekly decline against the dollar, which is the length of the strip loss since June.
The dollar index rose to its highest level since August, as the inability of the U.S. government to avoid automatic budget cuts, known as sequestration, encouraged investors to look for safer assets.
However, the euro to recover most of its losses against the dollar amid comments of U.S. President Obama. Obama said that until recently, tried to prevent the suspension of the government, as evidenced by his willingness to accept a program to reduce budget spending billions of dollars, which automatically goes into effect today, even though he did his best to prevent automatic spending cuts to save jobs place and avoid the negative effect on the economic recovery. Obama said that it was rebuffed congressional Republicans agree on a balanced budget by raising taxes on further spending cuts to avoid automatic sequestration. Obama also warned that the impact of automatic cuts would have a negative impact felt by ordinary citizens, and that will force Republicans to change their point of view.
The pound fell substantially after the data presented Markit, showed that the purchasing managers' index (PMI) for the manufacturing of Great Britain in February fell to 47.9, below the key 50 level that separates growth territory from the territory of contraction. Economists had expected a slight improvement to 51.0. Activity in the UK manufacturing sector declined in February, as the decreased amount of new foreign and domestic orders, and the company reduced staff at the fastest pace in more than three years. This renewed expectations that the Bank of England may resume quantitative easing program in one form or another, at its meeting on monetary policy, which will be held on Thursday.
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