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Dollar Extends Losses as Industrial Production Contracts

February 14, 2014 by

US fundamentals continue to disappoint and, as a result, the dollar extended its drop versus the euro. US industrial production and capacity utilization contracted last month, and it was an unpleasant surprise for experts, who predicted an expansion. Not all indicators were bad though, and the consumer sentiment, as well as import prices, surprised positively.

Both import and export prices rose in January. Import prices were up 0.1% instead of falling by the same rate as was predicted. The December reading was revised from no change (0.0%) to 0.2% increase. Export prices grew by 0.2% last month after rising 0.4% in the month before. (Event A on the chart.)

Industrial production and capacity utilization rate fell in January. Production decreased 0.3% after increasing at the same pace in the previous month, while 0.2% increase was expected by market participants. Capacity utilization dropped to 78.5% in January from 78.9% in December (downwardly revised from 79.2%) instead of rising to 79.4% as forecasts have promised. (Event B on the chart.)

Michigan Sentiment Index was unchanged at 81.2 in February, according to the preliminary estimate, while specialists have thought it would drop to 80.6. (Event C on the chart.)

EUR/USD-2014-02-14

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