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The following data was published:
(Time / country / index / period / previous value / forecast)
Switzerland 6:00 Trade balance, bn in July 3.55 3.79 2.93
7:00 France Business activity index in the services sector (provisional) in August 50.5 50.5 52
France 7:00 PMI in the manufacturing sector (provisional) in August 48.6 48.8 48.5
7:30 Germany Index of business activity in the services sector (provisional) in August 54.4 54.4 53.3
7:30 Germany Index of business activity in the manufacturing sector (provisional) in August 53.8 53.5 53.6
8:00 Eurozone PMI in the manufacturing sector (preliminary data) August 52 52 51.8
8:00 Eurozone business activity index in the services sector (provisional) in August 52.9 52.8 53.1
10:00 UK Balance industrial orders Confederation of British Industry in August -9 -4 -5
The euro strengthened moderately against the US dollar, reaching 19 August high. The euro was supported by the data on business activity. A preliminary report from Markit Economics showed that the euro zone's private sector continued to expand in August, and recorded the fastest pace in 7 months. The composite PMI index, which covers the manufacturing sector and the service sector rose to 53.3 in August from 53.2 in July. Economists had expected the index to decline to 53.1. However, a preliminary index of business activity in the services sector rose to 53.1 from 52.9 a month earlier. The manufacturing PMI dropped to 51.8 against 52.0 in July. The German private sector expanded at a slower rate - the composite index fell to 54.4 from 55.3. Meanwhile, the French private sector recorded the fastest growth rate in 10 months - the composite index improved to 51.6 from 50.1.
Investors also adjusted their positions ahead of the release of the US statistics, namely the manufacturing PMI index and data on new home sales. According to forecasts, the PMI index fell to 52.7 from 52.9 in July, while sales of new homes fell in July 580 thousand to 592 thous.
At the same time, the market focus gradually shifted to the speech of Fed Yellen at the symposium in Jackson Hole, which will take place on Friday and could shed light on certain issues. Some experts believe that the statement may signal whether the Fed sees a strong enough economic momentum, which would allow to raise interest rates in September or in the coming months. According to the futures market, the probability of a Fed rate hike is 15% in September and 40.9% in December against 39.9% the previous day.
The British pound rose significantly against the dollar, updating the 3-week high. Later this week, analysts will analyze the Brexit impact on the UK economy. On Thursday we have the index of retail sales of the Confederation of British Industry (CBI), which will show whether consumer spending rebounded in August. On Friday, data on investment in the 2nd quarter will show what influence the uncertainty in connection with the referendum had on the plans for capital investment. The Bank of England is worried that companies could postpone investment until the situation of the UK and the EU will be clearer.
EUR / USD: during the European session, the pair rose to $ 1.1354
GBP / USD: during the European session, the pair has risen to $ 1.3208
USD / JPY: during the European session, the pair fell to Y99.93
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