Dollar generally firmer

The dollar was generally firmer yesterday, strengthening against a broad range of currencies including the euro, sterling and the yen. The EUR/$ rate drifted down through the course of the day and hit a low in Asian trading overnight of around $1.2185, so within a whisker of the bottom of the $1.2150 to $1.2550 range that has been in place since the beginning of February.  With sterling falling against the dollar also, to around $1.39, this leaves euro-sterling largely unchanged at  around 87.5p

Higher US bond yields recently are supporting the dollar it seems. 10-year yields have risen by almost 25bps since the start of April , outstripping the increase in equivalent German and UK yields over the same period, and yesterday reached a more than 4-year high of 2.99% below easing back a touch. Expectations for further Fed interest rate hikes are partly driving this, with the market moving towards pricing in three quarter point increases this year

The Euro area composite PMI was unchanged at 55.2 in April, according to the flash estimate, having fallen in each of the two previous months. As indicated by Markit, who compile the index, the rate of economic expansion in the zone remains solid though it has moderated since earlier in the year

The EU’s chief Brexit negotiator, Michel Barnier  says the intention is to reach “an ambitious and wide-ranging free trade agreement” with the UK, but it is up to the latter to “come up with its vision for the future,  which should confirm the UK’s red lines (e.g. leaving the Single Market and the Customs Union) or adapt them”

Data due today includes the IFO index of business confidence in Germany and new home sales and consumer confidence in the US