Dollar firmer at the start of week

The dollar was firmer at the start of the week, strengthening to around $1.1150 against the euro and to $1.2750 against sterling while also gaining ground against the yen (to over Y111). US bond yields also nudged up, with both 2- and 10-year yields closing about 5bps higher on the day

Comments by Fed member Dudley supported the dollar. He said the expansion in the US still has a long way to go, the economy is at full-employment and, though inflation is a ‘little lower’ than the Fed would like, it is expected to pick up as wage growth also picks up. Given this, Dudley said it’s appropriate for the Fed to continue raising interest rates albeit ‘very judiciously’

Outgoing Bank of England MPC member Forbes believes  the committee is underestimating the extent of inflationary pressures in the economy and says it’s time to ‘reduce some of the stimulus’  i.e. increase interest rates. Meanwhile, BOE Governor Carney gives his re-scheduled Mansion House speech this morning, in which he is likely to address the outlook for interest rates. Sterling is steady this morning at 87.5p against the euro

The Brexit negotiations got underway yesterday, with the UK agreeing that a number of issues have to be addressed first (e.g. the ‘divorce bill’) before the talks turns to its new trading relationship with the EU

Very quiet today on the data front