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05.11.2013 19:20

American focus : the dollar rose against the euro

The euro exchange rate fell markedly against the U.S. dollar , though, and stepped back from session lows . Note that among the players on euro negative sentiment prevailed before the ECB meeting , scheduled for Thursday. Speculation pigeon rhetoric Mario Draghi continued to gain momentum after the release of the latest report on inflation in the euro zone , according to which consumer prices rose by 0.7 % y / y vs. 1.1 % previously , well below the target level of the ECB. This, together with the positioning will play against those who buy the euro. We add that the number of long positions on the euro reached a maximum level, which is not observed since May 2011 .

It should be noted that the pressure on the European currency also had a message saying that the European Commission reduced its economic growth forecast for the eurozone in 2014 and raised its estimate for unemployment for the same year, saying that growth will remain subdued , while the risks and uncertainties remains high . Commission reduced the outlook for euro area GDP in 2014 to 1.1 percent from 1.2 percent, as previously assumed, and also raised its forecast for the unemployment rate to 12.2 percent from 12.1 percent. The Commission expects that in 2013 the economy will expand 0.4 percent in the unemployment rate of 12.2 percent.

Meanwhile, we add that the strengthening of the dollar against the euro also helped the positive U.S. data , which showed that in October, the index of business activity in the U.S. service sector , which is calculated by the Institute for Supply Management (ISM) rose , reaching at the same level of 55.4, compared the September reading at around 54.4 . According to expert estimates , the value of this index was down slightly to 54.2 . All major sub- indexes in September remained in expansion ( more than 50). The greatest influence on the growth of the sub- indices have employment and business activity. Reducing the sub- indices showed new orders and prices.

The pound rose sharply against the dollar, which has been associated with the release of strong data on service sector activity in Britain. Activity in the UK service sector expanded at the fastest pace in more than sixteen years , showed in October , a survey by Markit Economics and the Chartered Institute of Purchasing & Supply (CIPS). On a seasonally adjusted Business Activity Index rose to 62.5 in October from 60.3 in September. October value represents the strongest growth in activity since May 1997 . The survey found that the volume of new orders showed the strongest growth rate since records began the survey in July 1996. Also during the month significantly increased employment. The report also noted that inflation accelerated on rising wages.

The composite index PMI, which measures business activity in the UK as a whole throughout the private sector , reached a historic high 61.5 in October , up from 60.2 in September.

Also, the growth of the pound has helped a message stating that the European Commission raised its outlook for the UK economy , as domestic demand and exports to help growth.

"Gross domestic product will grow by 1.3 percent this year and 2.2 percent next year. That is, the forecast has been increased compared to the previous one, which involved an increase of 0.6 percent and 1.7 percent respectively, " - said the commission.

Confederation of British Industry and the National Institute of Economic and Social Studies this week raised their forecasts after the economy grew by 0.8 percent in the third quarter, the highest rate in more than three years . According to the updated forecast CBI, the economy will grow by 1.4 percent this year and 2.4 percent in 2014 , according to a quarterly report. In August, CBI had expected growth of 1.2 percent and 2.3 percent , respectively.

The yen declined significantly against the dollar, having lost all previously earned position. Note that the initial growth of the yen helped worsening economic outlook in the euro area. Last week, the euro zone released unexpectedly low inflation rates, which, coupled with high unemployment fueled speculation about a possible reduction in the refinancing rate of the ECB on Thursday . CPI inflation in the region has increased in September at 0.7% vs. 1.1 %. Rate b / d eurozone remains at a record high of 12.2%. Data on the Spanish labor market , released this morning showed that the unemployment rate rose by 87,028 in October. Pessimistic data led the ECB to lower the growth forecast for the euro area to 1.1 % compared with the May estimate.

However, surprisingly good U.S. data could change the course of trade , throwing the yen against the dollar to levels of the session. The report showed that in October ISM in the U.S. service sector rose to 55.4 vs. 54.0 and 54.4 in September , indicating that the acceleration of growth in the category.

05.11.2013 18:20

European stock close

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