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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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Brief review of the market.
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13:51 06/20/2004
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Brief review of the market.
The dollar dropped declined against major currencies following an unexpected decision of the Bank of Switzerland to raise the rate.
On Thursday, National Bank of Switzerland slightly tightened its monetary policy, having widened price range for three-month LIBOR rate to 0% - 1.0% from an earlier 0% - 0.75%.
The Bank also declared that it would aim at the middle of the range (0.5%) compared to the previous target close to lower bound (0.25%). That corresponds to raising the rate 25 base point higher.
The Bank explained that decision was based on strengthening economic advance and ending deflation threat.
Rate hike in Switzerland was an unexpected one and occurred for the first time in four years.
However, the rate of the dollar recovered its positions after the release of data on inflation and employment rate in the U.S.
The last economic indicators make us assume that FRS discount rate would be raised more aggressively for fighting inflationary pressure.
In the U.S., initial claims for unemployment benefits dropped 15 000 down to 336 000 claims in the week ended June 12.
Last week’s indicator was revised from 352 000 to 351 000. Economists expected 345 000 claims this week.
During the week, four-week moving average decreased 2 750 to 343 250 from previous 346 000.
The overall number of citizens, receiving state unemployment benefits, rose 31 000 to 2,9 million people from 2.869 million people in the week ended June 5.
Data like that is positive for the rate of the dollar, as they indicate employment growth.
On Thursday, the U.S. Department of Labor said PPI, indicators of inflation in wholesale sphere, rose 0.8% in May compared to April. Significant rise of the index was conditioned by rise of wholesale prices for energy (+1.6%) and food (+1.5%).
Core PPI, excluding food and energy, rose 0.3% in May.
The outcome was higher than expected by economists.
In Average, economists had looked for 0,6% gain in PPI, whereas its core component was expected to rise 0.2%.
In the last 12 months ended in May, wholesale prices in the U.S. rose 0.5%, which was the highest in the 12-month period since December 1990.
Core PPI rose 1,7% in the last 12 months, which was the highest since January 2001.
Rise in wholesale prices for trucks and light-duty trucks contributed to rise in core PPI.
The given prices had risen 1.1% in May after 1.0% dip in April.
On Thursday, Philadelphia Federal Reserve Bank said Philadelphia Fed index dropped to 23.8 in June compared to 23.8 in May.
In June, Philadelphia Fed index was higher than zero for the thirteenth straight month, thus pointing at growing activity in the given sphere.
Economists though index would rise in June against May but they did not expect reduction.
In average, they had looked for 25,0 value.
Index component, reflecting new orders, rose from 18,3 in May to 24.0 in June.
Component, reflecting employment in production sector of Philadelphia and its region, dropped from 22,6 to 16,8.
May value of the given component was the highest since April 1973.
Index component, reflecting prices paid by production companies for raw material, materials and complete sets, dropped from 59.6 to 51.9.
As reported by Conference Board, leading indicators index rose 0,5% in May in the U.S. compared to April.
In average, economists had looked for 0,4% gain.
The forecast was created by trans1.
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