Market news

10 November 2015

American focus: the US dollar rose moderately

The US dollar continues to strengthen amid growing expectations of market participants regarding the first in nearly a decade of rising interest rates by the Federal Reserve System. The EUR / USD fell more than 0.5% to trade below $ 1.07, its lowest level since April. Further reduction of the pair will be observed in the case of rising interest rates in the US, and if the European Central Bank in December, decides to extend its program of quantitative easing.

Some impact on the dollar have data on import prices in the United States. Prices of imported goods in the United States continued to decline in October, pointing out that the cheap oil, a strong dollar and slower growth abroad continue to put pressure on inflation rates. This was reported in the report of the Department of Labor.

According to the data, the import price index fell in October by 0.5% compared with a revised decline of 0.6% in September (originally reported -0.1%). Economists had expected a fall of the index by only 0.1%. In annual terms, import prices fell by 10.5% in October, registering the 15th consecutive monthly decline.

The Labor Department said that the decline in prices in October was broadly based. Prices for oil and natural gas, industrial supplies, paper and metal, food, automobiles and capital goods - all these categories recorded a decline. Meanwhile, petroleum import prices fell by 48% compared to last year.

But a stronger dollar and weak demand in overseas demand caused a decline in prices for other products: the import price index on non fuel products fell by 3.2% over the past year, showing the biggest decline in more than six years. Add the index continuously decreases from July 2014. Experts point out that the fall in prices for imported - one reason that inflation remains historically low.

Also, the data showed that export prices fell by 0.2% in October compared with the previous month. In annual terms, export prices decreased by 6.7%.

The pressure on the EUR / USD pair had recent reports on the formation of a consensus on further ECB rate cut on deposits in December. Meanwhile, speaking at the head of the Bundesbank and ECB Governing Council member Weidmann once again expressed concern the risks associated with the fact that monetary policy in the region may be too relaxed for too long. Meanwhile, a member of the Governing Council of the ECB Erkki Liikanen said that still can be traced risks for inflation prospects and economic growth, adding that the Central Bank "willing and able" to act in order to achieve its goal of price increases. "The Governing Council is willing and able to act using all available tools in the framework of its mandate, if it is necessary to maintain an appropriate degree of monetary control," - said Liikanen. "Inflation targeting ECB is symmetrical. This means that monetary policy reacts to too low and too high inflation with the same force," - said the politician.

The Swiss franc fell against the dollar. Experts note that although European shares and falling, it has not been able to support the safe haven franc. Demand for the dollar may remain strong amid growing expectations of Fed rate hike in December.

Little influenced by a report on the labor market of Switzerland. As it became known, the seasonally adjusted unemployment rate was 3.4 percent in October, unchanged compared with September. We also add the last value in line with expectations of experts. However, the unadjusted unemployment rate rose in October to 3.3 percent compared with 3.2 percent in the previous month. The growth rate confirmed expectations. The number of registered unemployed persons increased in October 3043 compared with the previous month, amounting to 141.269 people at the same time. In annual terms, the number of unemployed increased by 8.872 people. The unemployment rate among young people (age group 15-24) dropped to 3.5 percent from 3.7 percent in September.

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