Dollar weaker again

The dollar is weaker again at the start of play this morning, having fallen to around $1.25 against the euro, to over $1.40 against sterling, and to close to Y106 against the yen. The currency’s fall coincided with more gains for equity markets, which rose by more than 1% yesterday notwithstanding firmer than expected inflation data in the US

The annual rate of CPI inflation in the US remained at 2.1% in January, though this was ahead of the consensus forecast of 1.8%. The core rate of inflation also remained steady last month, at 1.8%, albeit again this was ahead of forecast (1.7%)

The inflation data probably keeps the Fed well on track to raise interest rates again soon – most likely next month – and so bond yields rose further yesterday, with 10-year yields in the US up around 7bps to 2.90% (closing in the 3% level last seen at the end of 2013)

Separate data in the US showed retail sales fell in the opening month of 2018, though this followed a strong increase in the final quarter of last year. On-going job gains as well as tax cuts should support spending

Data due today includes industrial production and jobless claims in the US