Dollar resumes its ascent

After a pause on Monday, the dollar has resumed its gradual ascent against the euro and sterling that began over the latter part of last week, with the US currency trading at around $1.0850 and $1.29 respectively this morning. The euro also lost some ground to the pound for a time yesterday, briefly slipping below the 84p level, but has partially recovered to trade at about 84.1p at the start of play today.

German government bonds led a modest decline in yields generally yesterday with 10-year yields falling by around 5bps or so. In equity markets, European stocks added to Monday’s gains, rising by around 0.5%, but US indices closed marginally lower on the day.

ECB Vice-President de Guindos says the central bank “will have more information in September, and especially new macroeconomic projections, so we will be able to better reassess the monetary policy stance,” adding that “data-wise, September is a much more convenient month for taking decisions than July was.”

Consumer confidence in the Euro area rose for a sixth month in a row in July, according to the European Commission’s latest survey,  reaching its highest level since just before Russia’s invasion of Ukraine in March 2022. Declining inflation is helping to boost consumer sentiment and support spending.

Economic data due today include flash PMIs for July in the Euro area, UK and US, which will give an indication of the state of play in the three economies at the start of the third quarter, with new homes sales and the trade balance scheduled in the US as well.