Dollar gains

The dollar gained yesterday trading to under $1.175 to the euro and $1.375 to sterling. There was mixed COVID news in the US, with the vaccine rollout moving on smoothly but concerns over a rise in cases in some states. US equities headed lower as the fallout from the Archegos continued, the S&P fell 0.3% and while the Eurostoxx gained yesterday, it has opened slightly lower this morning

Bond yields were higher with the US 10- year getting up above 1.75% for a time yesterday. Yields rose across Europe also. Markets continue to focus on inflation risks with vaccine rollouts and multiple stimulus and support packages set to spur on economic growth in 2021

The EU Commission’s sentiment index rose to 101 in March, higher then expectations and the strongest reading since the beginning of the pandemic in 2020. This data indicated that consumers and business are hopeful for the future and that there is light at the end of the tunnel. Our own Bank of Ireland Economic Pulse feeds into the EU Commission index and it also rose in March with businesses here upping their expectations for hiring and activity in the coming months

German inflation increased in March with the annual rate up to 2.0%, the highest level since April of 2019. The headline rate is boosted by one off factors such as the end to tax cuts that were implemented last year and an increase in the minimum wage. Higher energy cost are also adding to inflation currently. The March inflation print for the Euro area is due today with the expectation that it will tick up also, and while the ECB believes higher inflation is temporary, markets will be watching closely

The Irish Government announced a cautious revised re-opening plan for the economy. Residential construction will return from the 12th of April with a phased reopening of non-essential retail and personal services from May 4th

UK Q4 2020 GDP was revised to 1.3% quarter-on-quarter (from 1.0%) and the year-on-year decline is now seen at -7.3% (from -7.8%). Revisions to other quarters mean the annual rate for 2020 as a whole was barely changed and is now -9.8% (from -9.9%)

On the agenda today, Euro Area inflation and ADP employment in the US. Also in the US, President Biden is set to announce an new infrastructure investment plan – which will greatly increase spending – and revisions to the tax code