Dollar loses ground

The dollar lost some ground to the euro yesterday, falling to almost $1.11, following some softer than consensus economic data out of the US and after Donald Trump slapped tariffs on steel imports from Brazil and Argentina.  Sterling is also a little firmer against the US currency, trading at just over $1.2950 this morning, but is a touch weak against the euro at around 85.5p, as attention begins to focus on some narrowing of the Tories lead over Labour (although it remains sizeable) based on an average of the most recent polls

Donald Trump said both Brazil and Argentina were presiding over a sharp devaluation of their respective currencies (in fact both have been intervening to prevent steeper declines) which was negatively impacting on US agricultural exports, hence his decision to slap tariffs on steel imports from the two countries. He also called on the Fed to cut interest rates to weaken the dollar, though the central bank is highly unlikely to oblige

Trump’s trade war with China has depressed manufacturing activity globally, including in the US with the ISM index of manufacturing activity there slipping further below the expansion-contraction level of 50 in November amid a further decline in order books last month. Meanwhile, the latest GDP estimate from the Atlanta Fed points to growth running at 1.3% in Q4 (based on the data available to date in the quarter), which compares to the Q3 outturn of 2.1%

ECB President Christine Lagarde notes that “the prolonged slowdown in economic activity (in the Euro Area) has been affecting price developments, which remain subdued”, adding that the ECB’s accommodative monetary policy stance will continue to support the economy and help return inflation to its target over time

The value of retail sales in the UK fell by 4.9% year-on-year in November according to the latest (unofficial) British Retail Consortium monitor, though the BRC notes that “adjusted for the later timing of Black Friday and Cyber Monday, sales are more likely to have increased by a more palatable 0.4%” (y-o-y)

Data day today include the construction PMI (November) and unit labour costs (Q2) in the UK