Dollar reigns

The dollar is on the front foot, benefiting in an environment where concerns about the global economy are to the fore, reflected in a renewed decline in bond yields in the core markets (with German 10-year yields back in negative territory). The US currency strengthened to an overnight high of around $1.1140 against the euro – its strongest level since late 2017 –  which is more or less where it remains this morning, and is continuing to nudge higher against the pound trading at about $1.29, with the latter a little firmer against the euro at just under 86.5p

The IFO index of the business climate in Germany dipped in April, which added to the markets’ concern about the economic outlook generally, though it held above its February low and was broadly in line with its average level in the first quarter of the year, suggesting perhaps the growth in Germany may be stabilising having slowed over the course of 2018 and into early 2019

The Bank of Canada has become the latest central bank to change tack on monetary policy. Having back in January said that interest rates would need to rise, yesterday following its latest meeting it indicated keeping rates on hold would be appropriate. It noted that global economic growth had slowed by more than it was forecasting in January,  though it expects activity to pick up during 2019 supported by, among other things, “accommodative financial conditions” on foot of the recent increase in equity markets and the fall in bond yields

The NIESR institute is forecasting GDP growth in the UK of 1.4% this year and 1.6% in 2020.  It notes that, “with inflation stable at target (2%), and only limited evidence of domestic inflationary pressure”, interest rates are expected “to remain at 0.75% throughout this year before being raised to 1% in the second half of 2020”

Data due today includes the CBI’s latest retail sales survey in the UK and jobless claims in the US