The dollar is firmer against both the euro and sterling this morning, trading at $1.10 and just under $1.30 respectively (and leaving the euro-sterling rate largely unchanged at about 84.75p), reflecting relatively positive US economic data published over the past couple of days and as equity markets continue to rally. Remarkably enough perhaps, the S&P 500 in the States closed at an all-time high yesterday having recovered all – and then some – of the coronavirus-related ground it had lost over the past couple of weeks or so
Core bond yields continue to move higher as stocks recover. Benchmark US 10-year yields closed up another 5bps yesterday at 1.65%, which brings the cumulate increase since the end of last week to around 15bps but this still leaves yields some 15bps below their level just before concerns about the coronavirus began to gain traction in markets
ECB President Lagarde says “the history of these (coronavirus-like events) has been there could be a significant short-term (economic) effect, but no long-lasting effect…(but is) continuing to monitor closely how these risks develop and how they feed into our central scenario for the (Euro Area) economy.”
The ISM index of activity in the non-manufacturing sector of the US economy rose in January to its highest level since August last year (to stand at 55.1), pointing to solid GDP growth at the start of this year.
The PMI measures of economic activity in the Euro area and the UK in January were both revised higher according to the final readings, and both were running about the 50 expansion-contraction threshold albeit at the same time signalling relatively modest growth in GDP in the two economies at the beginning of 2o2o
Data due today includes jobless claims and labour costs in the US