Euro a little weaker

While the single currency picked up during the day yesterday, to over $1.085 to the dollar for a time, it slipped back in the afternoon and starts off this morning at just over $1.08. The euro also struggled against the pound and, while touching off 88p at times, is now closer to 87.5p. This was against a backdrop of general strengthening of sterling which also gained on dollar, to $1.24 briefly, but has now slipped back to around $1.235

In government bond markets, yields fell back back as markets bet that interest rate increases may slow.  German 10-year yields lost close to 10bps to 2.0%, while equivalent US yields are also lower just below 3.35% (from over 3.5% at the start of the week). UK 10-year yields, meanwhile, fell to 3.25%

US equities were on the backfoot yesterday, with the S&P dipping over 1.5%. This was in an environment of weaker than anticipated data with US industrial production down 0.7% month-on-month in December and retail sales fell -1.1%, both bigger declines than expected

ECB Governing Council Member Villeroy said yesterday that President Lagarde’s guidance that interest rate increases will be in 50bps steps remains valid. However, he reiterated that the council remains data driven and its too soon to talk about size of  the likely interest rate increase in March

Irish residential property prices rose at an annual rate of 8.6% in November, from 9.7% in October, as price rises continue to moderate. Prices are rising on a monthly basis, but again at a slower pace than we saw in summer months.

Economic data due today include ECB minutes, housing starts in the US as well as jobless claims. Speakers include President Lagarde from the ECB and Brainard and Williams from the Fed