4 December, 2013
The US dollar was traded downwards on Tuesday Vs most major currencies amid no significant macrostatistics in the USA. The pound strengthened on the back of the UK Construction PMI growth to its high since August, 2007. The yen rose amid fixed long positions on USD/JPY and stock markets decrease.
IBD/TIPP Economic Optimism rose by 1.7 p. in December or by 4.1% to 43.1 p. compared with 41.4 p. in November. The index has been growing for two months already after the decrease to 2-year low. The index is a good leading indicator for U. of Michigan Consumer Sentiment that will be released later.
ISM New York index in November rose by more than 10 points to 69.5 p. In October the index was 53.9. November index has become the highest since October, 2010. ISM New York index which mainly refers to non-manufacturing companies is released a day before the national ISM nonmanufacturing report.
The British pound strengthened on Tuesday amid the UK Construction PMI growth to its high of August, 2007. The UK construction PMI rose to 62.6 p. in November from 59.4 p. in October signaling a strong increase in the construction sector. The index above 50 p. indicates activity growth in the sector. The index has been above 50 p. for seven months in a row.
The euro also followed the pound and rose amid unemployment decrease in Spain in November for the first time for 4 months. Spanish Unemployment rate in November fell by 2.5 thousand in comparison with the prior month when it grew by 87 thousand – while unemployment rate was expected to grow by 50 thousand. The decrease has become the first one for November in the country’s history and probably it is a signal that the bottom of unemployment crisis in Spain has passed.
At the same time producer price index in the euro-zone was worse than expected and has fallen in October for the third month in a row, which may strengthen the concerns that a low inflation can threaten a fragile recovery in Europe. Producer price index fell in October by 0.5% in comparison with the prior month while a decrease only by 0.2% was expected. At an annual rate the prices dropped by 1.4% Vs the expected decrease by 1%.
Australian dollar fell after the Reserve Bank of Australia on Tuesday left the interest rates unchanged for the 4th consequent month but then it grew. RBA governor Glenn Stevens said that Australian dollar rate was still unreasonably high and there was a need of currency devaluation for a balanced growth of economy. The AUD was supported by retail sales data which grew by 0.5% m/m in October having exceeded the expected growth by 0.4%. At the same time current account deficit in Australia turned out higher in the third quarter than forecasted.
The yen rose amid the decrease of stock markets and fixation of long positions on USD/JPY within the upcoming annual heights. Another factor was the decrease of the world stock markets, which has increased the demand for safe assets. Dow Jones Industrial Average dropped by 0.6% on Tuesday, which has become the lowest decrease for almost a month.
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