Dollar on the back foot

The dollar is on the back foot following yesterday’s Fed meeting in the US, weakening to $1.10 against the euro and to almost $1.24 against sterling. The single currency has also gained ground against the pound, trading close to 89p this morning

In government bond markets, US 10-year yields have fall post the Fed meeting, declining by more than 10bps to about 3.40%, while equivalent German and UK yields are also lower at around 2.20% and 3.30% respectively

The Fed raised interest rates by 25bps to a range of 4.50%-4.75% as widely expected. It said it “anticipates that ongoing increases in (rates) will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time”, with Powell (the Fed chair) indicating that this means “a couple” more hikes (taking rates to a range of 5.0%-5.25%)

The annual rate of CPI inflation in the Euro area fell for a third consecutive month in January to 8.5% (from 9.2% in December) according to yesterday’s flash reading, helped by declining energy prices, though the core rate held steady at 5.2%

The ECB and Bank of England announce their latest interest rates decisions later today, with both expected to hike by another 50bps

Economic data due today includes jobless claims and factory goods orders in the US