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The euro rose against the dollar ahead of tomorrow's ECB meeting and against the closure of short positions in the pair. Contributed to the strengthening of the single currency weak data on activity in the U.S. service sector. The index of business activity in the U.S. service sector (ISM Non-Manufacturing) in June dropped to 52.2 from 53.7 the previous month. Experts predicted an increase to 54.3 index points. The indicator above 50 indicates growth in business activity, and the value of the index below 50 points - about the decline of activity. ISM index calculates the ISM Non-Manufacturing corporations on the basis of the 62 segments of the service sector, which accounts for about 90% of the U.S. economy.
Earlier, the euro fell against the dollar under the influence of weak PMI data in the service sector in the eurozone. Only Spain and France was able to make positive note in today's report services PMI, but the Germany and the euro area as a whole disappointed investors. As the results of the final studies, which were presented to Markit Economics, the results of last month to reduce activity in the private sector of the euro area has slowed down, which was associated with a slower decline in employment and the number of new orders. According to the report, the composite output index, that measures activity in the manufacturing and services sectors, rose in June to a level of 48.7, up from 47.7 in May. However, despite this significant improvement, the latter figure, after all, was slightly below the pre-assessment at the level of 48.9, indicating that the rate of decline was greater than anticipated. Recall that the value of this index is below 50 suggests contraction in activity. The composite index remains below this threshold for 17 consecutive month, but recent rate of decline in business activity in the private sector were the weakest in the past 15 months. Meanwhile, the data showed that the index of business activity in the services sector rose in June to the level of 48.3 from 47.2 in May, which was lower than the preliminary estimate at around 48.6.
Also note that the recent events in Portugal and Greece have added a negative. News about the growth of bond yields in the debt markets boosted concern among traders ahead of tomorrow's ECB meeting. As it became known, the yield on 10-year Portuguese bonds exceeded the psychologically important level of 7% (after Monday was less than 6.5%) and continues to grow, now residing at 8%. Portugal shares lost 5.6% this morning.
Value of the pound has increased significantly against the U.S. dollar, which has helped to publish a report on Britain. As the results of recent studies that have been presented Markit Economics and the Chartered Institute of Purchasing and Supply, at the end of last month, the growth in the British service sector accelerated to the highest level in more than two years, which was supported by a significant increase in new orders, which was the highest since 2007. According to the report, in June, the index of business activity in the services sector climbed to 56.9 - the highest level since March 2011. Note that by the end of May, the index rose to a level of 54.9. A reading above 50 indicates expansion in the sector of activity. We also add that with the last read it already was the sixth consecutive month extension. Many economists had forecast a slight drop in the index - to 54.6.
The data also showed that the growth in the number of new orders were the highest since June 2007, which encouraged the company to increase the number of jobs. It should be noted that this growth was the highest since August 2007. Meanwhile, it was reported that the level of trust between service providers in June reached a 14-month high. Note also that the increase in purchase and selling prices accelerated during the last month. But despite the increase in selling prices inflation was moderate, and was much lower than the cost price.
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