Dollar a touch softer

The euro and sterling are both a touch firmer against the dollar this morning, trading just north of $1.1850 and at over $1.32 respectively, with the single currency-pound rate hovering a little below 90p as the UK-EU trade talks enter a crucial week. Equity markets ended last week on a reasonably solid note and European stocks are opening in positive territory again today, while core bond yields are edging lower

As the UK-EU negotiations enter what is being termed a “make-or-break” week in terms of reaching an agreement on their future relationship – though of course it is never over until it is over – the UK’s David Frost says his side “are working to get a deal, but the only one that’s possible is one that is compatible with our sovereignty and takes back control of our laws, our trade, and our waters”

The Euro Area economy rebounded quite strongly in the third quarter with GDP increasing by 12.6% having plunged by 11.8% in Q2 and the annual rate of decline easing to 4.4% from almost 15%, while employment also recovered some ground increasing by nearly 1% quarter-on-quarter although it was still running well below its level in Q3 2019

ECB member Olli Rehn says “…for me the context for the forthcoming decision in December is not whether we will decide on further additional accommodation in monetary policy, it is rather which instruments, in which scale and duration, will best serve the purpose of supporting the European economy though the second wave, which we are now suffering from”

Data due this week include CPI inflation and retail sales in the UK on Wednesday and Friday respectively and retail sales and industrial production in the US tomorrow (Tuesday)