UK Services PMI Growth Rate Reached More Than 6-Year High

August 6, 2013

The US dollar was traded on Monday downwards against most major currencies despite service PMI growth. The pressure was put by the Friday labor market report that turned out worse than expected, which may make the Fed put off the start of QE tapering off. ISM Non-Manufacturing PMI rose significantly in July having reached the level of 56 p. (the highest since February) from June reading of 52.2 p. while a growth to 53.1 p. was forecasted. PMI, prices and new orders showed the highest growth while employment decreased by 1.5 p., which has become a negative moment.  

The pound grew amid a significant increase in the UK service sector – up to more than 6-year high. Non-Manufacturing PMI rose to 60.2 p. in July from 56.9 p. in June having exceeded the forecast of 57.3 p. considerably – and it reached the highest reading since December, 2006. The index has been higher than 50 p. for seven months in a row already, showing a constant growth all this time.

The euro was traded downwards on Monday after it didn’t manage to overcome the level of 1.33 against the dollar despite service PMI growth. The released statistics turned out neither the worst nor encouraging. The euro-zone service PMI rose to 49.8 p. in July against 48.3 in June having exceeded the preliminary reading slightly but still not having reached 50 p. that separated the growth from reduce. At the same time the euro-zone composite PMI exceeded 50 p. for the first time since January, 2012 and grew to 50.5 p. in July against 48.7 p. in June. Euro-zone retail sales dropped by 0.5% in June while a decrease by 0.7% was forecasted; and at an annual rate the sales fell by 0.9% with the forecasted decrease by 1.3%.

The yen rose after the decrease of the Japanese stock market amid the US weak employment data – Nikkei 225 fell 1.4%. The Australian dollar recovered after it had updated new 3-year lows after the release of weak retail sales data. Retail sales in June maintained unchanged compared with the prior month while sales growth by 0.4% was expected. Besides, Australian Minister of Industry declared on Monday that the Australian dollar must slump and local producers needed AUD at $0.80.

New Zealand dollar was traded downwards on Monday amid the export suspension of some dairy products to China due to bacteria in them – although it had partly recovered its lost positions by the end of the day. The world's largest exporter of dairy products, New Zealand's Fonterra, announced on Saturday that some of its products might contain bacteria that caused botulism. As far as Fonterra, the largest company of New Zealand provides 25% of the country's exports, any course of events that can reduce the exports, has a negative impact on the rate of the national currency.

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