Last week was one of two halves as far as the euro was concerned with the single currency strengthening to an intra-week high of well over $1.23 on Wednesday before slipping back to $1.22 by the close of play on Friday. The pound also lost ground to the dollar over the course of last week, shedding almost 2 cents to end at around $1.35. All of this left the euro-sterling rate trading in a narrow range around 90p, which is where it kicks off this morning
Higher bond yields in the US seem to be providing some support to the dollar. The prospect of a further fiscal stimulus for the economy under the Biden administration contributed to a sharp 20bps jump in 10-year yields to over $1.10 last week. Equivalent German yields also rose, but much more modestly so, increasing by around 5bps or so
Employment in the US fell by 140k in December according to Friday’s “payrolls” report. The weakness, though, was concentrated very much in the Leisure and Hospitality” sector which shed almost 500k jobs last month. The overall economy-wide unemployment rate held steady at 6.7%
The unemployment rate in the Euro Area dipped for a second consecutive month in November to stand at 8.3%, though this downward trend may not be maintained in the face of tighter/extended public health restrictions in many countries
It is relatively quiet on the data front this week with the main release probably UK GDP for the month of November due on Friday.