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03.08.2015 18:20

American focus: the dollar fluctuates

The US dollar was mixed against shows the euro and the yen after the release of US data block. The US Commerce Department announced: the rate of increase of personal spending slowed significantly by the end of June, pointing to the fact that the weak wage growth is putting pressure on consumers.

According to the report, the volume of personal spending rose in June by 0.2% compared with the previous month, recording the smallest increase since February. We also learned that the expenditure for May was revised down - up + 0.7% from + 0.9%. Meanwhile, the amount of personal income, which includes wages and state aid, rose by 0.4% in June, after rising 0.4% in May (revised from + 0.5%. We add the latest changes of costs and revenues fully in line with economists' expectations.

The report came after last week's Commerce Department reported that inflation-adjusted consumer consumption rose by 2.9% annually in the second quarter. But wage growth unexpectedly slowed in the second quarter, which probably was the reason for such a modest increase consumption.

Meanwhile, the Commerce Department reported that the price index for personal consumption expenditures, which is the preferred inflation sensor Fed, rose 0.2%. The basic price index for personal consumption expenditures, which excludes the cost of food and energy, rose 0.1% from May and 1.3% in annual terms.

In addition, the report published by the Institute for Supply Management (ISM), showed that in July, the activity in the US manufacturing sector deteriorated sharply, contrary to the forecasts of experts on the slight improvement. PMI index for the US manufacturing was in July of 52.7 points against 53.5 points in July. It was expected that this figure will rise to 53.6 points.

The report also stated that the new orders index rose to 56.5 from 56 previously, while the sub-index of production - up to 56 from 54. Unfilled orders fell to 42.5 from 47 in June, reaching the lowest level since November 2012. The employment index fell from 55.5 to 52.7, while export orders component fell to 48 from 49.5. Meanwhile, the index of inventories fell to 49.5 from 53 in June, and the price index fell to 44 from 49.5.

Pressure on the euro earlier had mixed performance by PMI. The research results presented by Markit Economics, showed: Germany's manufacturing sector continued to show expansion in July, but slightly slowed the pace of growth compared with the previous month. According to the data, the final Purchasing Managers' Index (PMI) for the sphere of production, which is about one-fifth of the German economy, was 51.8 points compared to 51.9 points in June. It is worth emphasizing, the index remains above the 50 level that separates growth from contraction for the eighth month in a row. Analysts had expected the figure will be 51.5 points. "The manufacturing sector in Germany began the third quarter with a moderate rise. Although PMI remained above the neutral mark of 50 points, the pace of expansion is impressive," - said Oliver Kolodseike, economist at Markit.

Meanwhile, another report showed that manufacturing activity in the euro zone rose in July, slightly higher than originally reported, but compared with June growth rate is still slowed, partly due to the influence of the Greek debt crisis. According to the final purchasing managers' index in the manufacturing sector amounted to 52.4 points in July against preliminary level at 52.4 points and the final figure for June at the level of 52.5 points. Analysts had expected the July figure will be 52.2 points. "Despite a slight slowdown, the manufacturing sector has been surprisingly resilient in the past month, and almost felt the Greek debt crisis - said Chris Williamson, chief economist at Markit. - In fact, it is surprising that growth does not slow down, Bearing in mind that manufacturing activity in Greece has fallen to a record low last month. However, the sharp decline in Greece was offset by improvements in other countries of the eurozone. "

Also today, it was reported that activity in the manufacturing sector in Greece deteriorated sharply in July, reaching a minimum value for the entire 16-year history of observations, which was caused by an unprecedented drop in the number of new orders and difficulties in acquiring raw materials. The seasonally adjusted index of business activity in the manufacturing sector fell in July to a level of 30.2 points against 46.9 points in the previous month.

The pound fell sharply against the US dollar, entrenched below $ 1.5600. Experts say that the pound is almost ignored the data on business activity. Recall, the growth of business activity in the manufacturing sector accelerated in Britain in June, but new orders rose at the slowest pace for almost a year. The report says that the index of manufacturing activity PMI, calculated Markit / CIPS, rose in July to a mark of 51.9 points compared to 51.4 points in June (at least more than two years). However, despite the improvement, the index is still below the historical average of 54.3 points level. The Markit said that the growth rate of new orders slowed to its lowest level since September 2014, highlighting the challenge for policy makers in terms of achieving a more balanced long-term economic growth.

Now the markets are waiting for a meeting of the Bank of England, which will take place on Thursday. For the first time the central bank at the same time announce a decision on interest rates and to publish the minutes of its meetings, and new forecasts for the UK economy. Economists expect that the two members of the management of the Bank of England will show disagreement and vote for it to raise interest rates, which remain at record low levels for over six years.

03.08.2015 16:04

WSE: Session Results

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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