Market news

2 February 2016

American focus: the US dollar weakened

The US dollar weakened slightly against other major currencies in quiet trading as oil prices resumed their downward trend, while concerns about global economic growth persist.

Asylum-yen strengthened after the price of oil back towards $ 30 a barrel after jumping to $ 34 in the previous three sessions.

Meanwhile, investors remained cautious amid concerns about global economic growth after data on Monday showed a reduction of manufacturing activity in China in January, the sixth consecutive month.

Positive impact on the growth of the euro also had data on the labor market in the eurozone. Statistical Office, Eurostat reported that the results of December the unemployment rate in the euro area decreased to 10.4% from 10.5% in November. The latter value was the lowest since September 2011. Recall that in December 2014, unemployment was 11.4%. Experts expect that the unemployment rate will be 10.5%. Meanwhile, it was reported that among the 28 EU countries the unemployment rate in December remained at 9.0% (with a minimum of June 2009). In the corresponding month in 2014, unemployment was at 9.9%. According to estimates by Eurostat, 21,944 million. Men and women in ES28, of which 16.750 million. Resident in the euro area, were unemployed in December. Compared with November, the number of unemployed decreased by 52 000 in the EU and 49 000 in the euro area. Compared with December 2014, unemployment fell by 2.026 million. EU and 1,501,000. In the eurozone. Youth unemployment was 4.454 mln., Of which 3.057 million. Were registered in the euro area. Compared with December 2014, unemployment decreased by 426,000 in the EU and 229,000 in the eurozone. In December 2015, the youth unemployment rate was 19.7% in the EU and 22.0% in the euro area.

A slight pressure is applied to the statistics on producer prices. Eurostat said that in December, producer prices in the euro area decreased by 0.8%. In the EU it was also recorded a drop of 0.8%. Analysts had expected prices in the euro area will decrease by 0.6%. Recall that in November, prices fell by 0.2% in the euro area and among the 28 EU countries. In annual terms, the producer price index decreased by 3.0% in the euro area and fell by 3.2% in the EU. In November, prices in the euro area and fell by 3.2%. Experts expect that the prices in the euro zone will fall by 2.8%.

The British pound rose sharply against the dollar, reaching yesterday's high. Strengthening pound noted despite the risk aversion and the data on activity in the construction sector in Britain. Most likely, support the pound had news that Britain has reached an agreement with the EU on one of the points of the plan of conservation into the EU. During the talks with the President of Cameron's EU Tusk parties approved the draft proposals for the reform of the EU. They relate to the possibility to change or block the action of European laws, if they are found to be undesirable 55% or more of the countries - EU members. According to the source, it should strengthen the role of the national parliaments of European countries. Later, Cameron said that the draft of the revised document on the relationship of Britain and the European Union demonstrates the substantial progress on all issues in which Britain wanted to make a difference.

With regard to the previously submitted data from Markit / CIPS, they showed that the rate of growth of business activity in the construction industry slowed sharply in January, exceeding the forecasts of experts and reaching 9-month low. According to the PMI index in the construction sector fell to 55.0 points compared to 57.8 points in December. Analysts had expected the index to fall to 57.5 points. The volume of new orders rose weakest pace in four months, while the pace of hiring new staff building firms were the slowest since September of 2013. Optimism among construction companies fell to its lowest level since December 2014. Markit also noted that the decline in the construction of houses and commercial real estate were the main reasons for the deterioration of the index in January. "The construction sector in Britain started the new year with a sharp deterioration. Increased economic uncertainty had a negative impact on the growth of new orders and the amount handed over the objects that fell to the lowest level since the summer of 2013," said Tim Moore, economist at Markit.

The Swiss franc fell moderately against the dollar. The reason for this was the weak retail sales data and statements of the SNB. As it became known, the volume of retail sales in Switzerland declined in December, recording the fifth consecutive monthly decline. According to the data, sales declined by 1.6 percent per annum, after falling 1.7 percent in November (revised from -3.1 per cent). Excluding fuel, the turnover in the retail sector fell in December by 1.5 percent compared with 0.8 percent drop in November. On a monthly basis, retail sales rose in December by 1.1 percent, offsetting a decrease of 0.6 percent recorded in November (revised from -0.8 per cent). At the same time, sales excluding fuel rose 0.8 percent after falling 0.6 percent in November. In nominal terms, sales decreased by 3 percent compared to last year and 1 percent in monthly terms.

Meanwhile, the head of the SNB's Jordan once again said that the franc remains overvalued. He added that if necessary, the Central Bank is ready to make an intervention.

Market Focus
  • German economy continues to underperform in August - IHS Markit
  • Gaps remain with U.S. on trade after 'very tough' talks - Japanese Economy Minister
  • FOMC meeting minutes showed the central bank intends to remain flexible regarding future changes to interest rates.
  • IMF: currency devaluations due to policy easing cannot improve trade balance

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