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Euro fell after rising during the U.S. session against the U.S. dollar on news that Fitch Ratings agency downgraded the outlook on France, with the level of AAA to AA +, while maintaining a stable outlook in terms of the country's debt. As one of the main reasons behind this decision the agency has named a high level of insolvency of the French government. An estimated Fitch, in 2014, the level of public debt in the country will reach 96% of GDP, and will continue to decline slowly, falling in 2017 to a value of only 92%.
The dollar fell after the preliminary results of the research showed that were presented Thomson-Reuters and the Michigan Institute in July, American consumers feel less optimistic about the economy than had been recorded in the last month. According to the data, in July consumer sentiment index fell to 83.9, compared with a final reading for June at 84.1. It is worth noting that according to the average estimates of experts, the index should have grown to the level of 85.3.
At the same time, at the end of last month the U.S. producer prices rose significantly, thus showing the largest increase in the past nine months, which was caused by a jump in energy prices. Experts point out that the current situation calls for a slight acceleration of inflation, despite the subdued level of expenditure on a number of other products. According to a report in the June producer price index rose a seasonally adjusted 0.8%, which was followed after increasing by 0.5% a month earlier. The increase was due to the 2.9% growth in the index of energy prices, reflecting higher prices for gasoline.
Earlier, the EUR / USD dropped sharply, falling below the minimum values of yesterday. On the dynamics of trade have influenced the data for the euro area: the end of May the euro zone industrial output fell markedly, thereby exceeded the forecasts of experts, which may indicate a continuation of the recession in the currency zone in the second quarter. The report showed that in May, industrial output fell by 0.3% in April and 1.3% from May 2012. It is worth noting that according to the average forecasts of experts, industrial output had fallen by 0.2% for the month and 1.4% over the year. The data also showed that the decline in industrial production in May was due to weak domestic demand and exports, as well as a sharp decline in production of durable consumer goods and capital goods. The decrease in production was recorded in most of the currency area, and even in Germany and France, as well as in Spain and Greece. However, was recorded a very sharp rise in Portugal, and more modest growth in Italy. In general, the EU production fell by 0.6% from April, and decreased by 1.6% from May 2012.
The pound also fell against the dollar, despite the positive manufacturing data in the construction industry. As it became known, the amount of production in this sector jumped in April, suggesting that the sector will contribute to economic growth in the 2nd quarter. According to the data, production in the construction industry adjusted for seasonal variations in April increased by 4.6% compared with the previous month, and in May remained unchanged. Strong growth in April was provided by companies to carry out orders that have accumulated since March, when the weather was bad. The relatively strong performance sector in April, followed adverse 1st quarter, when a decline in production in the construction sector has undermined economic growth. In the 1st quarter of production in the construction sector fell by 1.8%, limiting the growth of GDP of 0.3%, despite the acceleration of growth in the largest sector of the economy - the service sector. Also, the data showed that, compared with the same period of the previous year, production in the construction sector in April fell by 2.2% in May - 4.8%. Such a sharp annual decline in production in May was mainly due to the fact that banks in May this year was one extra working day more than in May 2012.
The yen fell against the U.S. dollar. As it became known, the Bank of Japan expects a moderate increase in exports and industrial production as the economy recovers, according to the central bank's monthly report, published on Friday. Meanwhile, data released today, which have been revised, showed that industrial production in Japan rose by 1.9% in May compared with the previous month, reflecting a steady increase in industrial activity due to the forces of domestic demand. Figure compared with an initial value increased by 2.0% after a 0.9% increase in April. In addition, it was reported that the index of capacity utilization increased by 2.3% in May compared with the previous month - to 98.1.
On Thursday, the bank raised its assessment of the economy, saying, "The Japanese economy is beginning to recover at a moderate pace." The Bank used the word "recovery" for the first time since January 2011, two months before the deadly earthquake and tsunami in the island nation.
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