Dollar firmer

Higher bond yields and a firmer dollar were the main features of yesterday’s session with the latter gaining around half a cent against both the euro and sterling.  The single currency remains under pressure this morning following weaker than forecast PMI data in Germany and France, trading at about $1.0860 and 85.4p against the dollar and the pound respectively.

Bond yields headed north again yesterday although US yields did close off their highs of the day, which sees German and UK yields nudging lower at the start of play this morning with the weaker PMI data also contributing to the move lower. Yields have now backed up quite a bit since the start of 2024 but still remain well below the levels they reached in late October last year.

The latest PMI readings for German and France released earlier this morning both came in weaker than the consensus forecast with the composite index falling to 47.1 and 44.2 respectively in January, remaining well below the key 50 level (the expansion-contraction threshold).

Following on from his victory in Iowa, Donald Trump has won in New Hampshire as well, so it seems we can starting looking forward to a Biden-Trump head-to-head in November’s presidential election.

Economic data due today include flash PMIs for January in the Euro area, UK and US.