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EUR/USD Drops as Fundamentals Spark Risk Aversion

March 1, 2013 by

EUR/USD fell today amid fears of budget sequestration in the United States. Poor macroeconomic reports from Europe added to risk aversion. As of US reports, they were mixed.

Personal income fell 3.6% in January after rising 2.6% in December. The expected decrease was 2.3%. Personal spending rose 0.2%, exactly as forecasters have predicted, following the 0.1% increase in the preceding month. (Event A on the chart.)

Michigan Sentiment Index climbed from 71.3 in January to 77.6 in February. This beat the preliminary estimate and the analysts’ forecast of 76.3. (Event B on the chart.)

ISM manufacturing PMI rose from 53.1 in January to 54.2 in February. This was an unexpected and pleasant surprise as experts have anticipated a decrease to 52.7. (Event B on the chart.)

Construction spending fell 2.1% in January from December when it grew 1.1%. This surprise was unpleasant as traders have hoped for a 0.6% increase. (Event B on the chart.)


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