The level of business activity showed a decline in the Eurozone in May, according to market reports. On the background of weak data on inflation in Germany there is a probability that the June meeting of the ECB will end with the decision to ease the monetary policy.
Expansion of business activity reduces its pace
The index of business activity in May fell to 52.2 points compared to April, when the figure was 53.4. The actual value is also lower than the forecast 52.5. The new orders reduction is considered to be the main factor of the reduction. Despite the decline, the index remains above 50, which is the boundary between the growth of activity and its reduction, said analysts of FBS. The last 11 months business activity indicator is in the expansion zone.
The dynamics of the business activity index was mixed in May. On the background of its reduction in France, the rise in Italy and Spain is observed. In Spain, the index raised to 52.9 from 52.7 of the previous value.
Investors expect a new stimulus from the ECB
Despite the slow pace and low lending the recovery in the Eurozone is gaining momentum. The ECB has repeatedly stated that the central bank introduced new incentives, if the economy would stick the recovery vector and the inflation would be low for a long time. Despite the first five months of growth in producer prices in some parts of Germany there is a decrease in consumer prices. The ECB task is complicated by the each new report release, and they expect in the UBS that the central bank will take at least a decision to introduce negative interest rates on Thursday. It is also possible that the ECB uses to expand the scope of operations of liquidity, including through the large-scale asset purchases.
The euro exchange rate maintains the long-term uptrend. EUR/USD is in the supposed wave (C) not less than the Daily. June 3, 2014 the pair is showing signs of ending the current wave, but the breakdown of the low level 1.3585 will form at least Daily2in the supposed wave (C) level, said analysts from Masterforex-V World Academy. Key support will become the line of the rising MF sloping channel and pivot MF 1.3296, the breach of which will complete a long-term upward movement. Having broken the maximum at 1.3993, the pair will continue a long-term upward trend. Possible resistances lie at Fibonacci levels 1.4104/39, 1.4285, 1.4348.
