26, July 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

Evidence of growth in the euro zone and strong sales of smartphones from the technology giant Apple, could rise European stocks and the euro on Wednesday, offsetting signs of sustained economic slowdown in China.

Initial estimates of manufacturing activity currency block of 17 countries showed that the region would be able to put an end to the 18-month recession, thanks to a surge of activity in the German and French industries.

The data helped the euro to reach month high against the dollar at 1.3255, extended the growth in European stocks and reduced the German bond futures by 0.5 percent.

"It seems that a moderate growth in Europe has started", - says Andrew Milligan, the head global strategy of Standard Life Investments. "But acceleration is not very probable at the moment, and there is potential for political events, which can make investors cautious again."

The latest quarterly survey of the European Central Bank's bank lending, which was published on Wednesday emphasized need for caution, pointing to a further tightening of lending standards, although consumer credit becomes as accessible as possible for the first time since 2007.

MSCI World stock index rose by only 0.2 percent, as Asian stocks constrain concerns about China's prospects.

Resumption of concerns about China derives from its enormous manufacturing sector, which has slowed to a 11-month low in July, suggesting that the slowing economy is still losing momentum.

The slowdown in China, which increased the probability of hard landing for the second largest economy in the world, has hit emerging market stocks and currencies, as investors look for better opportunities in developed markets, particularly in the United States.