Euro Under Pressure Despite EU Summit Decisions - 2.3.2012

US Dollar The dollar gained against the majors in Asian trading hours. Yesterday reports showed manufacturing in the US grew less than economists initially estimated. The Institute for Supply Management’s manufacturing index dropped in February to 52.4 from 54.1 in January, while personal spending indicator decreased from December to January by 0.1%. Nevertheless the labor market showed another sign of improvement, as the number of initial jobless claims fell by 2000 at the week ended on February 26 to 351000, the lowest level since March 2008, according to the Labor Department. The head of the central bank Ben Bernanke however said recently that “the job market remains far from normal”. The dollar index climbed to a one-week high today – 79.09. Euro The euro extended losses against the greenback this morning, despite European leaders agreed to accelerate capital provision to the permanent bailout fund. The 500 billion-euro fund may receive its first contributions in 2012 and may be already completed in 2015. Yesterday, on the first day of the EU summit, the leaders also expressed satisfaction with the progress achieved by Greece to receive financial aid and stay in the euro area. Today the leaders are expected to approve a1 fiscal pact aimed to improve fiscal discipline in the region. Great Britain and Czech Republic declined to sign the pact. The single currency dropped from 1.3332 to 1.3245 by the beginning of the European trading session. Japanese Yen Japanese yen turned out to be one of the worst performing currencies today. The US dollar rocketed to 81.74 against the yen, touching its nine-month high after Japan’s consumer prices fell for a fourth month. Consumer prices excluding fresh food dropped by 0.1%, excluding food and energy – by 0.9% in January from a year earlier. At the same time unemployment rate surged to 4.6% from 4.5% in January, indicating there may be a need to add stimuli measures. The central bank increased in January its bond purchase program by 10 trillion yen and indicated a 1% inflation goal.