Better tone to the dollar

The dollar remains on the front foot generally, helped by stronger than expected US retail sales data published yesterday. The US currency strengthened to under $1.17 against the euro for a time before ceding a little ground, and also rose against sterling and the yen. Sterling was little changed against the euro, trading at over 91p

US bond yields edged higher again with 10-year yields rising by around 5bps to 2.28%, while equivalent German yields increased by around 3bps to 0.45%

Retail sales in the US rose by more than the consensus expected in July,increasing by 0.6% month-on-month (while the June outturn was revised up to 0.3%), and so it looks like consumer spending will again make an important contribution to GDP growth in the third quarter

Annual CPI inflation in the UK was unchanged in July at 2.6% (the consensus had expected a slight pick up to 2.7%). The impact of sterling’s depreciation was evident in a continuing rise in inflation in some sub- components of the CPI last month, though this was offset by a fall in inflation in the energy component reflecting a decline in oil prices (which has since been reversed)

There’s more data from the UK this morning with the second quarter labour market report scheduled for release, while housing starts are due in the US this afternoon. The Fed publishes the minutes of its July policy meeting later today as well