Euro and sterling in tight ranges

The euro and sterling continue to trade in very tight ranges against the dollar and are little changed this morning at around $1.0830 and $1.2630 respectively, with EURGBP still hovering just below £0.86. There is some focus on the yen which has weakened towards levels against the dollar (just under Y152) that in the past has prompted Bank of Japan intervention to support the currency.

Equity markets had another mixed session with European stocks advancing for a second day running (albeit gains were limited) but US indices ending slightly lower on the day. It was quiet in bond markets with yields edging down a little.

ECB’s Kazaks says “inflation is low and will continue to fall” which will allow the central bank to cut interest rates “cautiously, step by step,” adding that he doesn’t have “any objection” to market pricing for a first cut in June (which does seem like a done deal at this stage).

Bank of England MPC member Mann, who abandoned her call for an interest rate hike at last week’s monetary policy meeting, says wage growth and services inflation in the UK “are stronger and more persistent than in either the United States or the Euro area,” making it “hard to argue” that the MPC would be ahead of the ECB and Fed in lowering interest rates.

The annual rate of (EU-harmonised) consumer price inflation in Spain rose to 3.2% in March from 2.9% in February, according to the flash estimate released earlier this morning. Inflation on the national CPI measure rose to 3.2% from 2.8%, though core inflation fell for an eight consecutive month to 3.3% (from 3.5%).

It is quiet economic data-wise again today with the European Commission’s Economic Sentiment Indicator for the Euro area the only release of note. On the central bank front, Fed Governor Waller speaks on the outlook for the US economy later today.