Dollar gains some more ground

The dollar has built on its immediate post-Fed meeting gains, strengthening to almost $1.11 against the euro and to under $1.34 against the pound. This in turn leaves the euro-sterling exchange rate hovering just above  83p this morning

European stocks advanced yesterday, by around half a percent, though they are under pressure this morning, while US stocks reversed course to end down around half a percent (having been up more than 1% at one stage during yesterday’s session). Meanwhile, US government 10-year bond yields nudged down to almost 1.80%, while equivalent German and UK yields were a little higher at -0.06% and 1.23% respectively

The pace of GDP growth in the US economy picked up to 1.7% quarter-on-quarter in the final quarter of last year from 0.6% in Q3. Over the year to Q4, GDP rose by 5.5%, after declining by 2.3% over the year to Q4 2020

ECB member Olli Rehn says that higher energy prices and supply bottlenecks that have “caused inflation to accelerate won’t, as such, lead to a long-term sustained acceleration in inflation unless they cause a wage-price spiral”, adding that “unlike in the US, in the Euro area wage developments…remain relatively subdued”

Data due today includes PCE inflation for December in the US, with the consensus expecting the annual rate of increase in consumer prices on this measure to have remained relatively stable last month at 5.8% (following a reading of 5.7% in November)

Also scheduled for release are the European Commission’s Economic Sentiment Indicator for the Euro area and consumer confidence and the employment cost index in the US