Euro Area growth picks up

The euro has gained some ground against the dollar, trading at almost $1.1225 this morning, supported by better than expected GDP data for the Euro Area, while sterling is firmer against both the single currency and the dollar, at just under 86p and just over $1.30 respectively, with the pound benefiting from reports of progress in the Brexit talks taking place between the Conservatives and Labour. Elsewhere, bond yields in the US nudged down yesterday but ticked up in the case of both German and UK yields, while equity markets generally closed marginally higher

The Euro Area economy grew by 0.4% q-o-q in the opening quarter of this year according to the flash GDP estimate published yesterday. This was up from 0.2% growth in the final quarter of 2018 and double the pace of growth the ECB had pencilled in for the first quarter in its most recent (March) projections, which should help to dampen some of the pessimism surrounding the economy that has built up recently

The unemployment rate in the Euro area continued on a downward trajectory in March dipping to 7.7%,  which compares to 8.5% in the same month a year ago and is not far off its single currency-lifetime low of 7.3% set in December 2007

Inflation in Germany accelerated to 2.1% in April, up from 1.4% in March and its highest level since late 2018, which together with a pick up in inflation in France, Italy and Spain points to higher inflation in the Euro zone as a whole last month (we’ll get a flash reading this Friday)

The Fed announces its latest monetary policy decision today, with interest rates set to remain on hold. While the Fed’s concerns about the US and global economies should have been allayed by recent data, it will be worried by the recent fall in underlying inflation in the US, which may be the focus of today’s post-meeting press conference

Data due today include the manufacturing PMI in the UK and the ISM index of manufacturing in the US