Weekly review (28.10 – 01.11.2013)

The euro fell for a fifth day against the dollar as signs of economic weakness in the single-currency bloc fueled speculation the European Central Bank will cut interest rates as soon as at its meeting next week. 

The common currency headed for its biggest weekly loss since July 2012 after data yesterday showed the region’s inflation unexpectedly slowed and the jobless rate climbed to a record. The dollar gained versus its major peers as a gauge of U.S. manufacturing rose to a two-year high. 

The dollar extended gains as the Institute for Supply Management’s factory index climbed to 56.4, the highest since April 2011, weakening the case for the Federal Reserve to maintain stimulus. Readings above 50 signal growth. A Bloomberg survey forecast 55, versus 56.2 last month. 

The Fed said Oct. 30 it would keep purchasing $85 billion of bonds per month to put pressure on borrowing costs and spur growth as it awaited more evidence the economy is improving. 

EURO 

The 17-nation currency headed for its biggest weekly decline since February after reports yesterday showed the region’s inflation slowed and unemployment climbed to a record. 

The euro has slumped 1% this week. 

The euro weakened for a fifth day against the dollar as signs of economic weakness in the single currency bloc fueled speculation the European Central Bank will cut interest rates as soon as next week. 

The ECB last lowered its benchmark rate on May 2 to a record 0.5%. 

Bank of America Corp., UBS AG and Royal Bank of Scotland Group Plc forecast the ECB will cut rates on Nov. 7. BNP Paribas SA, Societe Generale SA, JPMorgan Chase & Co. and Scotiabank predict a reduction in December, when the central bank will publish new economic projections. 

POUND 

Data released showed the October UK manufacturing PMI edged slightly lower to 56.0 from 56.3 in September (downwardly revised from 56.7) and in line with market consensus. 

YEN 

The yen eased against the US diollar and added versus the euro after the Bank of Japan yesterday maintained its pledge to expand the monetary base by as much as 70 trillion yen and forecast inflation will reach its 2% target, even as some board members cautioned that price outlook was too optimistic.

Source of information>>

More information>>