Dollar a touch softer

Doubts surrounding the US-Iran ceasefire weighed on markets for much of yesterday’s session. However, Israel’s announcement that it would hold direct talks with Lebanon helped change the mood late on. Oil prices fell back and US stocks rallied into the close, ending higher on the day overall, while Asian equity markets have advanced overnight. The dollar has given up some ground, though the trading ranges in FX are relatively tight. The euro is back up close to $1.17 against the US currency, while sterling is north of $1.34 again. EURGBP is trading at about £0.87.

US government bond yields ended marginally lower yesterday, amid some softer than expected economic data, while German and UK yields were 3-5bps higher across the curve, reversing just a small portion of Wednesday’s sizable declines. European stocks were in the red for the day, albeit marginally so, while the S&P 500 finished with a gain of just over half a percent.

In the US, the number of new jobless claimants rose by more than expected last week, albeit still remaining relatively low, and consumer spending in February was a touch weaker than forecast, while GDP growth in Q4 2025 was revised down a touch with the economy growing by 0.1% on the quarter. PCE inflation data for February were in line with expectations. Headline inflation was unchanged from January at 2.8%, while core inflation dipped to 3% (from 3.1% the previous month) as a decline in services inflation (to 3.2%) more than offset a further rise in goods inflation (to 2.3%).

There’s another batch of US inflation due today, including CPI inflation for March, which will show the effects of higher energy prices, and the University of Michigan consumer confidence/inflation expectations survey for April.

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