The US dollar rose significantly against other major currencies amid growing expectations for a rate hike in December in the US, while trade volumes are expected to remain weakened in holiday trading. Dollar feels the support after upbeat US data published during the week reinforced expectations that the Federal Reserve will raise interest rates at its meeting in December.
The euro fell sharply against the dollar, dropping back below $ 1.0600 and approaching the minimum on 25 November. Experts point out that the reason for such dynamics was the growth of interest in buying the dollar and the mixed data for the euro area. The European Commission said that economic sentiment in the euro zone remained stable in November, as the improvement in confidence among consumers was offset by a decrease in sentiment among manufacturers, but inflation expectations increased in both sectors. The overall index of economic sentiment in November was 106.1 points. The indicator for October was revised up to 106.1 points from 105.9 points. Economists had forecast the index to be 105.9 points. Meanwhile, the business climate indicator, which points to the phase of the business cycle, fell more than expected - to 0.36 from 0.44 in October. Projections indicate an increase to 0.45. The report also stated that economic sentiment in the euro zone improved mainly in the construction sector - the corresponding index rose to -17.8 against -20.7 in October. Consumer confidence also rose - up to -5.9 from -7.5. Meanwhile, the index of sentiment in the services sector rose to 12.8 from 12.3 in October. Sentiment indicator in industry fell to 3.2 against -2.0 in October, and the figure for the retail sector fell to 5.8 from 6.4.
Pressure on the euro also have expectations of the December meeting of the ECB in the course of which can be taken new measures easing (quantitative easing program increase and / or decrease in interest rates on deposits) in an attempt to accelerate the growth of inflation and the economy. If the ECB does soften the policy, the market may act according to the rule "buy the rumor, sell the fact", and then the pair will rise above $ 1.0700.
The pound has dropped significantly against the dollar, reaching a minimum of 6 November, which was associated with the publication of GDP data for the UK and the widespread strengthening of the US currency. As previously reported, the rate of economic growth in Britain slowed somewhat in the three months to September, but in line with preliminary estimates and expectations of experts. According to the data in the third quarter gross domestic product grew by 0.5 percent, which was slightly slower growth of 0.7 percent, which was recorded in the period from April to June. Last Modified confirmed analysts' forecasts. In annual terms, the economy expanded by 2.3 percent compared with 2.4 percent in the second quarter. Recall that last year, GDP grew by 2.9 percent, ahead while the other major advanced economies. Slow recovery in Britain reflects the slowdown in the global economic environment emerging markets, led by China. UK exporters also faced difficulties due to the strengthening of the pound this year.
The Swiss franc fell nearly 100 points against the dollar, five-year updating the maximum. According to analysts, the weakening of the franc due to the intervention of the Swiss Central Bank, which has intensified in anticipation of action by the ECB next week. Yesterday the head of the SNB Thomas Jordan said the bank is ready to use its balance sheet to keep the exchange rate, but does not consider the introduction of an upper limit for the franc to the number of possible options. "Our policy is very clear - said Jordan. - It is based on two pillars: negative interest rates and a willingness, if necessary, to intervene in the foreign exchange market." The next meeting of the Swiss National Bank, devoted to monetary policy, on 10 December. According to Jordan, the bank does not set any limits on the expansion of its balance sheet to weaken the franc.