Yesterday, the single European currency broke its long-term decline and was able to consolidate well. In part, this is due to purely European statistics. The index of business activity in the manufacturing sector fell from 59.6 to 58.6, which was slightly better than the forecast of 58.5. Investors were much more pleased with the data on the labor market. The unemployment rate coincided with the forecast of 8.6%, but the previous data was revised for the better, from 8.7% to 8.6%. Yet, the market reacted much more strongly to American data. Personal incomes grew by 0.4%, and expenses by 0.2%. This indicates a decrease in consumer activity, while stocks also grow. This is fraught with a decline in production, as well as inflation, and the result can be a sharp increase in unemployment. Thus, the picture looks not so happy. At the same time, the number of initial applications for unemployment benefits decreased from 220,000 to 210,000, while the number of repeat applications increased from 1,874,000 to 1,931,000. The growth of long-term unemployment is much more weight since it indicates that in the labor market there are no more empty seats. Meanwhile, the index of business activity in the manufacturing sector fell to 55.3 instead of growing from 55.5 to 55.9.
Today, the data on producer prices from Europe is expected. Its growth rate should slow from 2.2% to 1.6%. In other words, it is not yet necessary to wait for the growth of inflation in Europe. In the United States, there is no data available that makes the probability of a resumed dollar growth high.
The EUR/USD pair will gradually decline towards the level of 1.2200.
