European session review: US dollar fell moderatly against the euro
The following data was published:
(Time / country / index / period / previous value / forecast)
7:15 Switzerland Retail Sales m / m in May 0.1%
Switzerland 7:15 Retail sales, y / y in May -1.9%
Switzerland 7:30 PMI in the manufacturing sector in June 55.8 55.4 51.6
France 7:50 PMI in the manufacturing sector (the final data) June 48.4 47.9 48.3
Germany 7:55 PMI in the manufacturing sector (the final data) June 52.1 54.4 54.5
8:00 Eurozone PMI in the manufacturing sector (the final data) June 51.5 52.6 52.8
8:30 UK Index of manufacturing activity PMI June 50.1 52.1
9:00 The Eurozone unemployment rate in May 10.2% 10.1% 10.1%
12:00 Canada official holiday
The euro rose moderately against the US dollar, updating the session highs. Data on business activity in the euro area gave support for the single currency, which exceeded the forecasts. The final report submitted by the Markit Economics, showed that business activity expanded significantly in the euro area's manufacturing sector in June, registering maximum growth since the beginning of this year. However, experts warn that the decision of Britain to leave the EU can slow down the sector in the coming months. The final manufacturing PMI index rose to 52.8 in June against 51.5. Earlier it was reported to increase to 52.6. The sub-index measuring the volume of production, jumped to 53.9 from 52.4, which was slightly more than a preliminary assessment of 53.8.
Markit Economics said one of the reasons for the increase in demand for industrial products in June was another reduction of prices by companies that continued for almost a year. As a result, new orders rose at the fastest pace this year - the corresponding indicator improved to 53.6 points versus 51.7 points in May. In addition, data showed that manufacturing index for Germany rose to a 28-month high and amounted to 54.5 against 52.1 in May and the preliminary reading in June at 51.4. Meanwhile, the PMI index for France declined to 48.3 from 48.4 in May. The initial estimate was 47.9.
A report on the euro area labor market was also in focus. Eurostat Statistical Office announced that at the end of May the unemployment rate in the eurozone was 10.1%, a decrease of 0.1% compared to the previous month and confirming experts' forecasts. The latter value was the lowest since July 2011. Recall that in May 2015 unemployment was 11.0%. Among the 28 EU countries, the unemployment rate fell from 8.7% to 8.6% in May. In the corresponding month in 2015, unemployment was at 9.6%.
ECB Praet said that the economy has shown signs of strengthening, and this suggests that monetary policy works. "The ECB is set to continue to play a crucial role in this process, however, the ECB's policy can not be the only remedy for the current economic problems, need more actors." - Praet said. In addition, the politician said that among the uncertainties threatening the euro-zone economy, we can distinguish the British withdrawal from the European Union and the weakness of world economic growth.
The British pound consolidated against the dollar, while remaining near the opening levels of the session. Market participants ignored today's strong data on the UK, since it was calculated before Brexit. Recall Carney signaled yesterday that the Bank of England on the background of the results of the referendum may reduce interest rates during the summer. He added that the Bank of England has a number of other tools to support the economy and the banking system, which may indicate a resumption of the bond purchase program.
With regard to statistics, Markit Economics reported that manufacturing activity in the UK sector expanded in June at the fastest pace in five months. The report showed that the index of manufacturing activity rose to 52.1 in June from 50.4 in May. The last reading was the highest since January. Analysts had expected the index to decline to 49.9. Employment declined for the sixth consecutive month, but the purchasing and selling prices increased. Meanwhile, exports of industrial products grew at the fastest pace in seven months. "The main question is whether it will be possible to partially offset any negative impact of the uncertainty by increasing the volume of exports as a result of the fall of the pound," - said Markit economist Rob Dobson.
EUR / USD: during the European session, the pair risen to $ 1.1140
GBP / USD: traded in $ 1.3250- $ 1.3325 range
USD / JPY: fell to Y102.43