Ruble sinks to new lows despite rate hike

Moscow (AFP) – The ruble sank Friday to fresh record lows as oil prices plunged further, prompting apparent intervention from Russia’s central bank.

The Russian currency weakened to 72.14 against the euro and 57.98 against the dollar, before trading in the greenback suddenly jumped — in what appeared to be action by the central bank to halt the ruble’s haemorrhage.

“The ruble’s fall continued Friday morning…. After this followed a new intervention from central bank, it pushed the ruble rate down,” said Alexei Mikheyev, an analyst at VTB-24 bank.

The effect was shortlived, however.

“About 80 percent of the fall in the dollar-ruble rate based on the intervention was won back in the next half hour,” Mikheyev said, criticising what he called a “toothless” strategy from the central bank.

Russia has spent more than $ 5 billion so far this month alone on market interventions to shore up the ruble, and concern is growing at the rate of depletion of its foreign currency reserves, which are down a fifth since the summer of 2013.

The central bank’s actions to shore up the ruble have so far proved futile, with its latest one percentage point interest rate hike on Thursday shrugged off by the market.

Since the beginning of the year, the ruble has lost 36 percent of its value against the euro and 42 percent against the dollar.

At the heart of the problem is plunging oil prices, which, coupled with Western sanctions over the Ukraine crisis, have hurt the Russian economy.

Half of Russia’s revenues come from oil and gas. Replenishing its coffers is therefore proving to be more difficult than expected.

Analysts say the market is shunning the ruble on Friday because the central bank had failed to take more decisive action to help the currency.

“The market is mainly being driven by the disappointment of what is viewed as overly conservative action on the part of the central bank of Russia in hiking the key rate only 100 basis points,” Alfa Bank said in a research note Friday.

Other analysts speculated that more drastic action may yet be applied.

“The central bank responded by raising interest rates, but this failed to stem the ruble‚Äôs fall, leading to speculation that capital controls may be introduced,” Capital Economics said.

By raising interest rates, the bank was hoping to make the currency more attractive to savers and help fight inflation, which is projected to reach 10 percent by the end of the year.

Euro zone yields hit new lows after Fed signals no change for now

* Fed minutes suggest no hurry to hike interest rates

* Euro zone bond yields fall across the board

* ECB’s Draghi in focus for further hints on QE (Updates prices, adds more detail)

By Emelia Sithole-Matarise

LONDON, Oct 9 (Reuters) – Yields on Spanish and a clutch of top-rated euro zone bonds hit record lows on Thursday, after the minutes of the U.S. Federal Reserve’s latest policy meeting suggested it was in no hurry to raise interest rates.

Analysts said the minutes of the mid-September meeting, released on Wednesday, indicated concern about a slowing global economy and the dollar’s strength would keep Fed policy accommodative for now.

Global equities and U.S. Treasuries rallied with yields on shorter-dated notes, which go down as their price rises, falling to their lowest levels since late August.

Euro zone bonds extended this week’s gains, which were fuelled by concern growth is slowing in the region. Grim German industrial data and warnings from the International Monetary Fund led to expectations the European Central Bank would ramp up monetary stimulus. Poor German trade data reinforced those expectations.

Spanish 10-year yields fell 7 basis points to a record low of 2.03 percent. German, French, Austrian and Belgian equivalents also reached record lows

“The FOMC minutes were more dovish than expected with some members expressing increased concern about the slowdown in Europe as well as Japan and China with a couple also hinting at some anxiety about the dollar’s strength,” said Nick Stamenkovic, a strategist at RIA Capital Markets.

“Consequently, the market has pushed out the timing of a rate hike from Q2 to Q3 next year and hence Treasuries rallied, led by the short end and that’s boosted European fixed income markets today.”


German 10-year yields, the benchmark for euro zone borrowing costs, fell 4 bps to 0.866 percent, breaking a record low of 0.867 percent set in late August. Yields plunged on signs the euro zone’s biggest economy was stuttering as counter-sanctions between Russia and Europe over fighting in Ukraine took a toll.

Italian 10-year yields dipped 6 bps to 2.28 percent, not far from their record low of 2.255 percent set in early September. The move was bolstered by Prime Minister Matteo Renzi’s successful parliamentary confidence vote late on Wednesday, the most important of his eight-month government, on a contentious labour reform proposal.

Markets will scrutinise ECB President Mario Draghi’s presentation in Washington later on Thursday for hints on how soon the central bank could expand its asset purchases – focused for now on covered bonds and asset-back securities – to government bonds, a tool known as quantitative easing (QE).

Record-low inflation expectations and the grim euro zone economic outlook have re-ignited expectations the ECB will have to deliver Fed-style QE in coming quarters.

The last time Draghi spoke in the United States in August, he drew the market’s attention to the decline in the ECB’s preferred measure of market inflation expectations, the five-year, five-year breakeven forward rate. That measure has fallen to a record low of 1.88 percent since the ECB met last week.

“We think the QE timetable is much more accelerated than what the market is pricing here,” said Harvinder Sian, a strategist at RBS.

“You cannot have a central bank head stand up and shout fire on its most crucial component of what it does in terms of its inflation anchoring process and see that go wrong, then don’t expect the central bank to act. We think that the probabilities for a move in the next few months is still very high.” (Editing by Andrew Heavens, Larry King)

Euro falls, European stocks and bonds rise after ECB rate cuts

LONDON, Sept 4 (Reuters) – The euro fell to its lowest in more than a year against the dollar, while European stocks and bonds rose sharply on Thursday after the European Central Bank cut interest rates to record lows to lift inflation.

The FTSEurofirst 300 index of European blue-chips rose to a two-month high after the ECB decision to trade 0.8 percent up on the day at 1,396.08 points.

Bund futures rose to the day’s high of 151.33, up 49 ticks on the day, with 10-year cash German yields falling as low as 0.918 percent, within touching distance of their record lows. Bond yields fell sharply across the euro zone and money market rates also pushed lower.

Short-dated bond yields in Germany, Belgium, the Netherlands, Finland, France and Austria fell further into negative territory. Yields on bonds of up to four year maturities in Germany turned negative as well.

The euro fell to a 14-month low against the dollar of $ 1.3036 on trading platform EBS.

“It’s a surprise. Euro/dollar is getting slammed,” said Darren Courtney-Cook, head of trading at Central Markets Investment Management. (Reporting by London markets team, Writing by Marius Zaharia; Editing by Emelia Sithole-Matarise)

Euro zone yields dip as ECB expected to reinforce support

* ECB expected to reinforce its soft monetary policy stance

* Jackson Hole speech increases QE expectations

* Negative money market rates suggest rate cut bets

By Marius Zaharia

LONDON, Sept 4 (Reuters) – Euro zone bond yields dipped on Thursday as the European Central Bank was expected to reinforce its message that it was ready to use all its tools, including bond-buying, to support the economy and lift inflation.

But uncertainty over what the ECB would deliver at its meeting and how committed to further easing would President Mario Draghi be in his speech was high.

He told a central bank conference in Jackson Hole, Wyoming, two weeks ago that financial market expectations of inflation were falling significantly and that the ECB will use all its available instruments to ensure price stability.

Those comments increased expectations of a large-scale bond buying programme – known as quantitative easing, or QE – and pushed bond yields to record lows in most euro zone countries.

Since then, the market has somewhat pared those expectations, with Germany believed to still be reluctant to go down that route, and some analysts expect him to be less aggressive than at Jackson Hole.

Nevertheless, some analysts expect the ECB to cut rates or to make its upcoming long-term loans to banks more attractive, while others expect it to announce a smaller-scale programme of buying asset-backed securities to spur lending in the euro zone.

Such expectations are not widespread, but affect market prices ahead of the meeting.

German 10-year yields were 0.5 basis points lower at 0.95 percent, off record lows of 0.867 percent hit late in August, but still below the 0.99 percent seen before Jackson Hole and 1.07 percent just after last month’s ECB meeting.

“We’ve never been more uncertain about what they’ll decide and how the market will react to that,” KBC strategist Piet Lammens said.

“Given the rally in the past month and only a small correction in the past few days there is scope for a bit of downside in bonds unless he comes with something straightforward like a confirmation that indeed the whole council thinks inflation expectations are de-anchored.”

Spanish yields were also a tad lower at 2.28 percent before a sale of 2-3 billion euros of 10- and 30-year bonds.

France is also due to sell bonds.

In money markets, negative forward Eonia overnight euro zone bank-to-bank lending rates suggest investors see some chances that the ECB may cut rates and no action might push them slightly higher, Barclays strategists said.

“However … we expect the market to keep pricing in the ECB’s commitment to its accommodative monetary policy stance, expecting more actions in the coming months in the form of QE, meaning that any increase in volatility after today’s meeting would be temporary,” they said.

(Reporting by Marius Zaharia; Editing by Catherine Evans)

Euro zone bond yields hold at record lows after Spain inflation

* Spanish Aug inflation at -0.5 pct vs -0.6 pct fcast

* German inflation figures due at 1200 GMT

* Italy sells up to 8 bln euros of five- and 10-year bonds

By Marius Zaharia

LONDON, Aug 28 (Reuters) – Euro zone bond yields held at record lows on Thursday as a drop in Spanish inflation in August kept pressure on the European Central Bank to ease policy further.

Spanish inflation came in at minus 0.5 percent, higher than expectations of minus 0.6 percent but lower than in July. German inflation due at 1200 GMT was expected to be unchanged at 0.8 percent.

Overall, inflation in the euro zone is still sure to remain far from the ECB’s target of just below 2 percent. Data for the region as a whole is due on Friday and is forecast to slip to 0.3 percent from 0.4 percent.

Such data is increasing speculation that the ECB will follow in the footsteps of the world’s other major central banks and start pumping money into the flagging euro zone economy via an asset-buying programme, known as quantitative easing (QE).

In a landmark speech on Friday, ECB President Mario Draghi highlighted a “significant” fall in euro zone inflation expectations this month, dropping his strongest hint yet that a QE programme is possible over the next year.

“For the euro area, inflation may now be 0.3 or 0.4 percent but I don’t think this one figure is of major importance,” said Piet Lammens, a strategist at KBC in Brussels.

“What is important is that Draghi said that during August inflation expectations have dropped substantially.”

German 10-year yields were last a touch lower on the day at 0.907 percent, just above a record low of 0.896 percent on Wednesday.

Most other euro zone yields were near their record lows, with Spanish 10-year bonds yielding 2.14 percent and the Italian ones yielding 2.38 percent.

ECB sources said that the central bank is unlikely to take new policy action next week unless August inflation figures show the euro zone sinking significantly towards deflation.


The five-year, five-year forward breakeven rate – the ECB’s preferred measure of what the market thinks the inflation outlook is – has picked up since Draghi’s speech in Jackson Hole.

The rate, which now shows roughly where investors expect forecasts of inflation for 2024 to be in 2019, had fallen by roughly 20 bps in less than a month before those remarks and was approaching its 2010 record lows of around 1.90 percent. It has since picked up to a shade above 2 percent.

Other measures still show very low long-term inflation expectations. Ten-year inflation swaps stand at 1.5 percent, while five-year swaps trade at 1 percent.

Two-year German breakeven rates, derived from the yield gap between conventional and inflation-linked bonds, are negative. Ten-year breakeven rates at 1.26 percent are not far from Japan’s 1.18 percent.

Low inflation or deflation may create problems for the euro zone’s lowest-rated economies’ efforts to cut their debts. However, QE prospects make those bonds attractive at this stage as the market sees the ECB as a likely heavy buyer at any price.

This, coupled with investors receiving coupon payments, is expected to ensure a smooth sale of up to 8 billion euros in five- and 10-year Italian bonds (BTPs) later in the day despite yields being at record lows.

“The BTP market remains firmly supported by various factors, not least growing expectations of further action by the ECB,” Citi strategists said in a note.

(Graphics by Vincent Flasseur, editing by Nigel Stephenson)

FOREX-Euro bereft of support on ECB view, sterling off lows

* Euro falls to lowest in nearly two years on Swiss franc

* Speculation of more ECB action drives yields to record lows

* Sterling & Aussie show some resilience

By Ian Chua

SYDNEY, Aug 26 (Reuters) – The euro stayed on the back foot early on Tuesday, having extended its decline particularly against the Swiss franc overnight as markets toyed with the idea of another round of policy easing by the European Central Bank.

Hot on the heels of dovish comments from the head of the ECB, data on Monday showed German business sentiment sagged for the fourth month running, while a row over a lack of economic growth led the French government to resign.

The common currency skidded to its lowest in nearly two years on its Swiss counterpart to 1.2072, a move that could test the Swiss National Bank’s three-year old pledge to cap its currency at 1.20 per euro.

Investors also sold the euro against the yen and sterling, pushing it to a near one-week low of 137.22 yen and a two-week low of 79.50 pence. Against the dollar, the common currency traded at a one-year trough of $ 1.3184.

Speculation the ECB was preparing a programme of asset purchases drove most euro zone government bond yields to record lows on Monday. Germany’s two-year yield dipped to a 16-month low of five basis points below zero percent.

“We expect the broader trend of euro weakness to persist and remain short EURGBP in our recommendations portfolio targeting a decline to 0.76,” analysts at BNP Paribas wrote in a note to clients.

They added that data on Friday could show a further decline in the euro zone annual inflation rate to just 0.2 percent.

“This should add to the growing list of potential triggers for further ECB easing and weigh on the euro.”

Weakness in the euro helped underpinned the dollar index , which remained tantalisingly close to its September 2013 peak of 82.671. A break there will take it back to highs not seen since July last year.

On the yen, the dollar held just above 104.00, having peaked at a seven-month high of 104.49 overnight.

Sterling bounced off a five-month low of $ 1.6501 to last trade at $ 1.6568, making it one of the best performers against the broadly firmer greenback. Trading was thin, however, due to a UK holiday on Monday.

The Australian dollar was also quite resilient, ceding only a bit of ground against the U.S. dollar. It dipped below 93 U.S. cents, but was still well within its 92-95 cent band seen in the past five months.

That support partly reflected the market’s preference to buy the Aussie against the New Zealand and Japanese currencies. The Aussie scaled a nine-month peak of NZ$ 1.1169 and reached a near 15-month high of 97.27 yen.

Trading in Asia is likely to be subdued in the absence of any meaningful economic data. Later in the session, U.S. durable goods data could inject a bit of life into the market given there was a chance it would show a huge rise in aircraft orders.

Forecasts go as high as a 38 percent increase in headline orders, though the breakdown is likely to be more subdued.

(Editing by Shri Navaratnam)

Euro zone bond yields fall as Fed seen more dovish than expected

* Italy, Spanish yields head towards record lows

* Bunds also rally on Fed stance

* Eonia rate fixes at record low due to ECB measures (Adds details, analyst and trader comments)

By Emelia Sithole-Matarise

LONDON, June 19 (Reuters) – Peripheral euro zone bond yields headed back towards historic lows on Thursday in a market-wide rally after the U.S. Federal Reserve struck a more dovish stance on monetary policy than some had expected.

Longer-dated euro zone bonds sold off earlier this week after higher-than-expected U.S. consumer price inflation raised the possibility that the Fed might be open to raising interest rates sooner than many in the market had previously thought.

But the Fed did not note any inflation concerns after its policy meeting on Wednesday, and affirmed its commitment to retaining accommodative monetary policy.

Italian and Spanish 10-year yields fell 7 basis points to 2.78 percent and 2.69 percent respectively, within sight of record lows hit last week. Yields on top-rated euro zone bonds were 3-4 bps lower.

“The market was fearing a hawkish tone in the FOMC statement or at the press conference but the fact that (Fed Chair Janet) Yellen remained relatively accommodative is why the market is rallying,” said BNP Paribas strategist Patrick Jacq.

German bonds, the euro zone benchmark, unwound some of their outperformance of U.S. Treasuries. The two-year yield gap in favour of Treasuries tightened by 4 bps to 39 bps.

The spread was still at its widest in seven years, reflecting the policy divergence between the Fed and the European Central Bank. The Fed is trimming its monetary stimulus and is expected to start hiking rates next year while the ECB is set to maintain an ultra-easy policy for a few years.

Jacq at BNP Paribas said he expected Bunds to resume their outperformance of Treasuries, predicting the U.S. 10-year T-note yield premium would gain a further 10 bps in coming weeks to more than 130 bps, taking it back to 1999 peaks.


The ECB’s June 5 decision to cut interest rates and inject liquidity into the market has also driven short-term money market rates to historic lows, with the overnight bank-to-bank Eonia rate tumbling close to zero.

Eonia fixed at 0.015 percent on Wednesday, the latest in a series of record lows after the ECB stopped a weekly deposit tender to neutralise the effect of the bond purchases it made at the height of the debt crisis, injecting tens of billions of euros into the market.

The central bank’s measures have given extra impetus to the two-year long investor hunt for yield in the euro zone’s weaker economies that has squeezed their borrowing costs to record lows in some cases.

This enabled Cyprus to return to markets on Wednesday a little more than a year after it was bailed out.

Greece also returned to market with an issue of five-year bonds in April. Athens plans another bond sale in coming months.

“The initial chase for yield unleashed by the negative ECB deposit rate was more pronounced than the ECB could have hoped for,” Commerzbank strategists said in a note.

“Despite some signs of relaxation in recent days, the investment environment will remain challenging for some time, leaving investors little choice but to move down the credit curve, up the yield curve or out of the euro.”

Investors’ willingness to take higher risks to maximise profits is, however, exacerbating fears that some bonds have become overvalued and that some of the euro zone’s struggling economies may ease off on fiscal reforms.

Vanguard Group Inc’s new bond chief, Gregory Davis, said at a Reuters summit on Wednesday investors could be ignoring warning signs in less stable countries in their search for yield. His unease was echoed by Deutsche Bank co-chief Anshu Jain who said he was worried the ECB’s recent policy measures could remove the incentive for reform.

(Editing by Nigel Stephenson)

Euro zone short-term rates hit new lows, suggesting ECB moves may work

* Spot Eonia falls to record low

* ECB rate cut, liquidity injection still to take effect

* Forward breakevens rise with inflation outlook

* Greek yields drop, Cyprus plans comeback (Updates prices, adds new quotes)

By John Geddie and Marius Zaharia

LONDON, June 10 (Reuters) – Euro zone overnight bank-to-bank interest rates traded at record lows on Tuesday and short-term bonds outperformed longer-dated paper in a sign that the European Central Bank’s efforts to keep money markets anchored may bear fruit.

A measure of the market’s inflation expectations, derived from the difference between the yields of index-linked debt and conventional bonds – the euro five-year, five-year breakeven forward – was near three-month highs, showing increasing confidence in the ECB’s resolve to accelerate price growth.

While it was still early days, strategists said the market’s response to last week’s cut in the ECB’s main interest rates and its promise of fresh liquidity for banks suggested the measures could work. The moves could go further in the coming days as the ECB measures come into effect.

“Everything that has happened in the market is in line with what the ECB would have hoped for,” said David Keeble, global head of fixed income strategy at Credit Agricole. “The ECB is getting in front of the curve again.”

Spot Eonia fixed at 0.053 percent after markets closed on Monday, a new historic low.

The five-year, five-year breakeven forward rate , which is one of the ECB’s favourite tools for gauging the market’s inflation expectations, traded around 2.13 percent, some 3 basis points up from before the ECB meeting.

It moved further away from lows of just above 2 percent hit in May after below-forecast inflation data.


The amount of cash euro zone banks have beyond what they need for their day-to-day operations is a key factor holding short-term rates low. Excess liquidity stands at 120 billion euros, well above the three-year low of 70 billion euros hit at the end of last month.

A smaller take-up from banks at the ECB’s weekly liquidity offerings on Tuesday will squeeze 25 billion euros out of the banking system for the coming week, but the impact is expected to be limited and in any case temporary.

From next week, the ECB will inject around 170 billion euros into the banking system by halting tenders that withdrew funds spent on past government bond purchases.

It has also introduced 400 billion euros of ultra-cheap four-year loans for banks – conditional on their lending to the smaller companies that are Europe’s economic backbone – which will be available from September.

ECB Governing Council member Erkki Liikanen reiterated on Tuesday that the ECB still has tools it can employ if needed.

Forward Eonia rates are already pricing in expectations the ECB will keep the market pinned down, while six-month contracts dated for 12 months from now are low enough to suggest further policy loosening, say strategists.

Investors’ preference for short-dated German bonds over longer-dated ones is further evidence of confidence in what the ECB can achieve with its latest measures.

Two-year German yields fell slightly to 0.06 percent. Ten-year yields, the benchmark for euro zone borrowing costs, rose 2 bps to 1.40 percent.

“The ECB has given very strong forward guidance for the first two years, and all its measures work to pin front-end rates,” said Michael Michaelides, rates strategist at RBS.


The ECB’s pledge to keep rates at historic lows for some time has, however, fuelled demand for the higher-yielding bonds of some of the bloc’s weakest members.

Yields on 10-year Greek bonds dropped to as low as 5.48 percent, a level not seen since January 2010, while Portuguese equivalents were within a whisker of euro era lows after dropping 14 bps to 3.24 percent.

These new lows raise the prospect that Greece, which returned to markets in April for the first time since 2010, could soon issue more debt to help to stave off the need for a third bailout, Commerzbank said in a note.

The Republic of Cyprus – bailed out just last year – is set to meet investors ahead of a possible euro bond issue, IFR reported.

(Editing by Catherine Evans and Nigel Stephenson)

Euro zone yields hold near lows before ECB meeting

* Bond yields steady near recent lows

* ECB widely expected to leave monetary policy unchanged

* Spike in Eonia rate spike keeps alive chances of ECB easing

By Marius Zaharia

LONDON, May 8 (Reuters) – Euro zone government bond yields held close to recent lows on Thursday as a spike in money market rates kept alive an outside chance of the European Central Bank easing monetary policy further at its meeting later in the day.

None of the economists polled by Reuters expected the European Central Bank to make any move in May, a Reuters poll showed last week.

However, dwindling spare cash in the banking system has increased volatility in money markets in recent weeks. On Wednesday, overnight bank-to-bank Eonia rates settled at 0.26 percent, a touch above the ECB’s main refinancing rate.

ECB President Mario Draghi has flagged “an unwarranted” rise in money market rates as a potential trigger for monetary policy easing, without pointing to any specific level of rates.

Analysts say the central bank would want overnight rates to trade within the zero to 0.25 percent band defined by its deposit and refinancing rates as otherwise its monetary policy becomes less efficient.

The rates which banks pay to borrow cash in money markets are being transferred onto businesses and consumers, thus a significant and lasting rise in interbank rates would be the equivalent of policy tightening.

This could slow down the euro zone’s economic recovery and cap inflation, already running well below the ECB’s target at just 0.7 percent.

“The wild card is what the ECB thinks of Eonia rates surging yesterday,” said Suvi Kosonen, an analyst at Nordea. “Volatility is not the ECB’s friend and the central bank has an option to ease the liquidity situation already today.”

German 10-year Bund yields, the benchmark for euro zone borrowing costs, were flat at 1.475 percent, just off 11-month lows. Other euro zone bond yields were flat to slightly higher, with Spanish, Irish and Italian yields keeping close to the record lows they hit earlier this week.

The trend in lower yields has been supported this year by expectations that the ECB will eventually move to tackle low inflation. Half of the economists polled by Reuters expected some form of policy easing by the end of the year.

Such expectations should ensure debt sales of up to 4.5 billion euros in Spain and 750 million euros in Ireland go smoothly on Thursday.


Kosonen said rate cuts were unlikely, but the ECB could suspend its weekly deposit tenders through which it drains money from the banking system to neutralise the impact of the bond purchases it made at the height of the euro zone debt crisis.

The tenders were introduced to quell concerns that bond buying was direct financing of governments, something the ECB is not allowed to do. A suspension, rather than a cancellation, may not pose legal obstacles, analysts said.

Such a move would release 167.5 billion euros into the banking system, a sum equal to the outstanding amount of bonds the ECB bought under its defunct Securities Markets Programme.

Other analysts said the volatility in Eonia rates would only be a concern for the ECB if it filtered through to short-term bond yields, which was unlikely given that markets continue to see a chance of further easing.

German two-year yields were last trading at 0.15 percent, well within this year’s 0.07-0.27 percent range.

“The ECB will continue to show its willingness to fight inflation and that will keep short-term yields low. The volatility (in Eonia) should not be a concern for the ECB right now,” said ING rate strategist Alessandro Giansanti.

(Reporting by Marius Zaharia; Editing by John Stonestreet)

Forex – Euro hits session lows vs. dollar after ISM report – – The euro fell to session lows against the dollar on Monday after data showed that manufacturing activity in the U.S. expanded at a faster rate than expected in February, while concerns over the crisis in Ukraine also continued to support demand for the dollar.

EUR/USD hit lows of 1.3747 and was last down 0.35% to 1.3753.

The pair was likely to find support at 1.3730 and resistance at 1.3800.

The dollar was boosted after the Institute for Supply Management reported that its manufacturing purchasing managers’ index rose to 53.2 last month from 51.3 in January, ahead of forecasts for an increase to 52.0.

The report attributed the rise to an increase in new orders after bad weather caused disruption at the start of the year.

The euro remained under pressure as escalating tensions over the unfolding crisis in the Ukraine sparked a broad based selloff in risk assets, following Russian President Vladimir Putin’s decision to send troops into the Crimea region over the weekend.

Ukraine’s interim government has called for more international support to force Russian troops to leave.

The move sparked fears that the West will impose sanctions on Russia. Russia’s central bank hiked interest rates from 5.5% to 7% on Monday, after the rouble fell to new record lows against the euro and dollar.

In the euro zone, data on Monday confirmed that the region’s manufacturing purchasing managers’ index declined to 53.2 in February from 54.0 in January. It was the first dip in five months, highlighting the fragile nature of the recovery in the euro area.

The rate of decline in France’s manufacturing sector eased in February, while activity in Germany’s manufacturing sector rose for the eighth straight month.

The single currency’s losses were held in check after euro zone inflation data late last week eased pressure on the European Central Bank to tighten monetary policy at its upcoming meeting on Thursday.

The euro was lower against the broadly stronger yen, with EUR/JPY down 0.71% to 139.47.

The common currency fell to its lowest level in more than a year against the Swiss franc, with EUR/CHF hitting lows of 1.2103, the weakest since January 2013, before pulling back to 1.2124.

The euro was also lower against the pound, with EUR/GBP slipping 0.11% to 0.8224.

Sterling found support after data on Monday showed that the strong upswing in the U.K. manufacturing sector continued in February, with jobs growth in the sector accelerating to a 33-month high.

The Markit U.K. manufacturing PMI for February came in at 56.9, up from a revised 56.6 in January. Analysts had expected the index to tick down to 56.5. offers an extensive set of professional tools for the financial markets.
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