Dollar extends its post-US elections gains

The dollar remains very much on the front foot as it continues to extend its post-US election gains. It has strengthened further versus the euro and sterling to trade at $1.0620 and just under $1.28 respectively, with the pound not helped by a mixed UK labour market  report already released earlier this morning. The latter sees EURGBP trading a touch firmer at about £0.83, having dipped to a low of around £0.8260 in yesterday’s session.

German and UK government bond yields both edged lower yesterday, extending Friday’s decline. The US bond market was closed yesterday, but yields are higher this morning with 2- and 10-year yields up around 6-7bps.

European equities had a positive session, having underperformed last week, closing more than 1% higher on the day. US stocks also finished in the black, though gains were relatively modest following last week’s strong advance.

The unemployment rate in the UK rose by more than expected in the third quarter (July-September), coming in at 4.3% (up from 4.0% in the June-August period). The annual rate of growth in regular weekly earnings edged down to 4.8%, while earnings growth in the private sector was unchanged at 4.8%.

ECB member Stournaras says with inflation coming down the central bank can continue to lower interest rates, which he adds could end up “possibly close to 2% around next September.”

It is relatively quiet economic data-wise today, with the ZEW index for Germany/Euro area and the small business optimism index and New York Fed inflation expectations survey in the US the main releases.