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The euro fell to a three-month low against the U.S. dollar after comments from ECB representative of low interest rates. In an interview with Reuters Governing Council member Joerg Asmussen, explaining ECB President Mario Draghi made to them last week, said the ECB will probably keep rates low for more than 12 months. Asmussen also said that would not rule out another round of cheap credit that was used two years ago to inject capital into troubled banks in the eurozone.
A sharp decline in the euro reacted to those comments, as they were the signal that the ECB will continue to keep rates low, which reduces the attractiveness of euro-denominated assets to investors. Last week, Draghi promised that rates in the euro area will remain at low levels "for an extended period of time." It was an unprecedented move by the central bank.
Later, however, the ECB acted with objections as to the timing relative to a reference period of validity of the monetary policy.
The euro strengthened decline after the rating agency Standard & Poor's downgraded Italy's credit rating from BBB + to the level of BBB. As stated in the accompanying statement, S & P, this measure reflects the impact of the ongoing slowdown in Italy due to structural weakness and low vitality of its economy. S & P maintained a negative outlook on the rating, which indicates the possibility of further downgrade in 2013 or 2014, with a probability of 3.1.
The pound fell against the dollar significantly, aided by the publication of the report by Britain. As shown by recent data that was presented today by the Office for National Statistics, the volume of industrial production in the UK has not changed in the month of May, while manufacturing output unexpectedly fell.
According to a report in the May monthly basis, the volume of industrial production showed zero growth, while manufacturing output fell by 0.8%. It should be noted that, according to experts average output was increased by 0.3% and 0.5%, respectively. We also add that the rate of industrial production for April was revised down to -0.1% from 0.1%.
In addition, the data showed that on an annual basis, industrial production fell by 2.3%, beating economists' forecasts of 1.5% reduction, which was associated with a 2.9% fall in manufacturing and a 3.5% decline in the mining industry and quarrying.
The yen was suspended yesterday's decline against the euro, pending the outcome of a two-day meeting of the Bank of Japan, which starts tomorrow. Officials will discuss the situation in the markets, and, according to rumors, a reassessment of the country's economic growth upwards.
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