Dollar still under pressure

The dollar remains under pressure, though still holding under $1.14 against the euro, following the release of some weaker than consensus economic data out of the US. Sterling is also losing some ground again against the euro, trading close to 90p this morning, after possible UK Prime Minister-to-be Boris Johnson said he will take the UK out of the EU on October 31st ‘come what may’

Bond yields in the core markets edged down yesterday, as the weaker US economic data and the prospect of central bank interest rate cuts exerted an influence. Benchmark 10-year yields dipped below 2% while equivalent German yields fell further into negative territory to close at -0.33%, with UK 10-year yields about 3bps lower on the day at 0.79%

Consumer confidence in the US posted a sharp decline in June, probably reflecting the impact of increased trade tensions (including Trump’s threat to impose tariffs on Mexico) and weak jobs numbers for May reported at the start of this month. New home sales were soft again in May, declining by 7.8% after an almost 4% drop in April

Fed member Bullard, who dissented in favour of an immediate 25bps reduction in interest rates at last week’s monetary policy meeting, has reiterated his call for a cut though he said a 50bps move at this stage might be  “overdoing it”

Data due today includes durable goods orders and the trade balance in the US