05/04/2012 The dollar keeps strengthening – be careful
The euro decline, started after the release of the Fed meeting minutes, persisted for most part of the day yesterday. EUR/USD fell down to 1.31, though a couple of days ago it was high at 1.3350. Technically the euro/dollar is close to an important support level. The continuous slackness in the preceding days spilt over into the vigorous action. However, it seems to subside now on the reduced volumes before the holidays. It’s of interest that yesterday’s euro sales occurred on the upward revision of Services PMIs in the greater part of Europe. In March the Euro-zone final services PMI made 49.2 and PMI Composite -49.1 against the primary estimate of 48.7 for both the indicators. The cautiousness about the euro was caused by a poor Spanish auction, which failed to attract the required buying interest. Still, for some European countries economic news pales in comparison with the situation in the financial markets. However, with the USA it’s different. Despite a short hitch with the ISM service-sector index, more and more commentators and analysts find the situation in the country improving. The Services PMI showed a certain slowdown in the pace of expansion, having fallen from 57.3 down to 56.0. Actually, the slowdown was expected to be more moderate, down to 56.9. Anyway, the figure for the first quarter of this year is 3 bp higher than that of 4Q of the last year. The ADP data didn’t display any downward deviation from the trend set over the recent months either. Private sector employment grew by 206K, which coincides with the average figures of last year’s October. Apart from statistics, yesterday the attention of markets was compelled by Draghi’s press-conference. There’s small wonder about the interest rate being kept at the current level. But Draghi’s comments on the possible acceleration of inflation in the coming quarters really surprise. It looks as though Germany forced the Bank to keep this parameter as its prime target.
Yesterday Britain again enjoyed a batch of good news. Just like it was recently demonstrated by the manufacturing and construction sectors, the data on the service sector exceeded the previous figures and expectations... Read full review