Dollar firmer
There was some respite for equity markets yesterday, following last week’s losses, with European and US indices gaining around 1% on average. Bond yields in the core markets also reversed course, with 10-year yields rising modestly on the day (and they are higher again this morning)
There was a firmer tone to the dollar, which is also continuing this morning, with the US currency trading close to $1.17 to the euro, around a cent higher than this tine yesterday. It is also nudging higher against sterling, trading just below $1.2950
Fed member Dudley says he would expect – and favours – another hike in US interest rates later this year, as the US labor market continues to tighten and inflation ultimately moves up towards its 2% target
The UK government says it is seeking a ‘temporary Customs Union’ with the EU for a transition period post Brexit, during which time it also wants to be free to negotiate trade deals with non-EU countries. Whether this finds favour with the EU27 remains to be seen
Sterling is trading largely unchanged against the euro at circa 90.7p ahead of today’s CPI data in the UK. The annual inflation rate unexpectedly fell back in June, to 2.6% from 2.9% in May, but according to the consensus is forecast to have ticked up to 2.7% in July
Other data due today include retail sales in the US