Dollar gains as stocks sell off

The dollar gained ground yesterday as international equity markets sold off on the back of concerns about the path of the coronavirus in many countries. The US currency is trading more than a cent higher against the euro and sterling this morning at around $1.17 and $1.2750 respectively, which leaves the euro-pound rate knocking on the door of 92p once again

European stocks shed almost 4% yesterday while US markets, which had been down by a similar amount at one stage, managed to recover some of their losses to close down a little more than 1% on the day. Not surprisingly core bond yields fell given the prevailing environment, with US and German 10-yields almost 5bps lower at 0.65% and -0.53% respectively

ECB President Christine Lagarde says the “strength of the (Euro Area) recovery remains very uncertain, as well as uneven and incomplete (and) continues to be highly dependent on the future evolution of the pandemic and the success of containment policies”

Germany’s Bundesbank – the country’s central bank – says it expects the recovery in its economy to continue over the second half of this year but at a slower pace, according to its latest monthly report, which notes than both manufacturing and services sector activity remain significantly below pre-crisis levels

Data due today include consumer confidence in the Euro Area and existing home sales in the US