Dollar loses ground

The euro and sterling are both on the front foot against the dollar this morning strengthening to over $1.09 and north of $1.24 respectively, leaving the single currency-pound exchange rate still hovering just below 88p

In government bond markets, German and UK 10-year yields are marginally higher today at about 2.15% and 3.25% respectively, while equivalent US yields are unchanged at 3.45%

European equity markets have opened in positive territory this morning, gaining almost 1% and reversing yesterday’s slight fall

ECB member (and Ireland Central Bank Governor) Makhlouf  says “we need to continue to increase (interest) rates at our meeting (in February) – by taking a similar (50bps) step to our December decision – and also at our March meeting”

The IFO index of the business climate in German rose in January to its highest level since June last year, largely reflecting a more optimistic assessment about the outlook over the next twelve months

GDP data due in the US later today are expected to show the economy expanded again in the final quarter of 2022 – by 0.7% from Q3 – according to the consensus forecast

Other data due today include new home sales and capital goods orders in the US as well