The European currency gave ground, yesterday, for the fourth meeting in a row, exchanging day against 1,4476 dollar, representing a decrease of 0.36. In the morning, the euro has even attempted an incursion below 1.44 (1,4385 dollar) dollar threshold that it had not crossed since January 22.
On the eve of the meeting of the European Central Bank (ECB), the economic news were positive with respect not help. The operators have had confirmation of the estimate of GDP for the second quarter: it shows a decline of 0.2 over the first three months of the year. "The threats weighing on growth, evoked by Trichet for several months, well materialize", says Cédric Thellier at Natixis. The Economist expects that the ECB taken into account in the new projections that it must disclose today. It relies on a forecast of growth of 1.6 for 2008, while the institution anticipated 1.8 in June, and 1.3 in 2009, against a previous estimate of 1.5. Natixis team provides an increase of 1.4 GDP this year. More pessimistic, Barclays Capital table 1.2. Retail sales, published also yesterday, proved to be lower than market expectations, with a decline of 0.4 in July. Services PMI index, slightly better than expected, appeared below the threshold of 50 points, indicating a contraction of activity.
Despite the proliferation of worrying signals for the euro area, the operators remain convinced that the ECB will maintain its unchanged interest rate to 4.25. According to Barclays, after the publication of the indicators, yesterday, the market still betting taking place on a status quo in December and gave a 55 probability to a gesture in March 2009 monetary easing and almost 90 per cent by June.
Fight against inflation
"According to members of the Board of Governors, an economic slowdown is not necessarily synonymous with disinflation", said Cédric Thellier, which sees not the paymaster make weapons soon in its fight against inflation, particularly against the so-called "second round" effects, such as the increase in wages. According to him, the ECB will also raise its inflation projections for 2008 and 2009, respectively 3.6 and 2.5. As a result, Jean-Claude Trichet could again hammering today that the Central Bank "has no bias" and ignore summer receding black gold courses.
The slump in the price of a barrel of crude under 110 $ also continued to support the greenback against the European currency Wednesday. The negative correlation between oil prices and the dollar sharply strengthened these past months, market dealing with these two assets together. Since oil at $ 147 record, July 11, the euro has depreciated by more than 9 against the US dollar.
Careful operators
Yesterday, the influence of situational indicators on the dollar remained fairly marginal. The good surprise generated by industrial orders for the month of July was not doped the greenback. Operators are cautious before the monthly employment report, tomorrow, so a study of the law firm Challenger Gray and Christmas, unveiled Wednesday, showed that the dismissals had increased from 11.7 in August from the previous year. The comments of the Boston Fed President Eric Rosengren, also prompted caution later in the day. "The unemployment rate could now exceed 6 ", he said. The market currently expects a rate of 5.7 for the month of August.
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