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10 February Forex daily review

Sergiy Zlyvko
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The euro exchange rate rose slightly against the U.S. dollar, which is likely was affected by the data output from Sentix research center, which showed that investor confidence in the Eurozone unexpectedly improved in February. Sentiment index rose by 1.4 points to 13.3 points. But conflicting data on industrial production in France supported the same appreciation of the euro. Growth rate forecasts of economists conceded that expected increase by 1%. Industrial production grew by 0.5% in December compared with the same month last year. In this position the euro was fixed in anticipation of tonight’s performance of new Fed chief Janet Yellen. According to analysts, it will confirm the Fed’s intention to continue to decline quantitative easing program with unabated volumes and will not deviate from the course indicated by Bernanke in December.

The yen was also slightly strengthened against the euro and the dollar in anticipation of a new speech by Federal Reserve Chairman Janet Yellen.

The Canadian dollar declined against the U.S. dollar, which has been partly due to the report on Canada. As it became known, in Canada the number of housing starts fell by 3.7% m/m to an average of 180,248 units in January. January result was lower than forecast of analysts expected 184,000 starts.

CMHC report showed that urban housing starts of new foundations fell by 2.7% last month to 163,158 units. Starts of urban apartments fell by 6% to 102,289 units, while single urban starts rose by 3.4% to 60,869 units.

The Swiss franc also showed a positive trend against the U.S. dollar on the background of the earlier report. Data showed that the unemployment rate remained stable at a seasonally adjusted 3.2 percent in January. Similarly, the unadjusted unemployment rate remained unchanged at 3.5 percent.

The dollar index suspended its five-day decline, even after in January in the U.S. was created only 113 thousand jobs and the unemployment rate fell to 6.6% compared to 6.7% in December, Ministry of Labour informed on Friday. Economists had expected an increase of the number of non-agricultural jobs by 185 thousand and unemployment fell to its lowest level since October 2008.

The Australian dollar rose to a four-week high after a positive report on real estate prices and the index of business sentiment from the National Australia Bank was published. In December, the number of approved loans for the purchase of residential real estate in Australia fell by 1.9%, while most economists had expected the growth of 1.0%. Record low interest rates have led to an increase in the real estate industry, which helps to protect the economy, especially after the end of the ten-year investment boom in the mining industry. In turn, January index of business conditions in Australia from NAB rose to 4 compared with 3 in December and business confidence index rose to 8 to 6.

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