Euro comes off the boil

Having had a good start to 2019, the euro has since come off the boil against the dollar. It ended last week trading just above the $1.1350 level, around a cent lower than at the close of business the previous week and about 2 cents off its 2019 high (admittedly we’re only 3 weeks into the year!). A recovery in stocks and a rise in US yields (in both absolute terms and relative to German yields) have helped the dollar advance over the past while.

Sterling has come off last week’s post Brexit deal vote high of almost 87.5p against the euro to trade about a penny lower at around 88.5p, though this is still well off its year to date low of over 90.5p. Prime Minister May is due to present her so-called Plan B to Parliament today, though judging by reports her cross-party talks have come to nought and it seems the PM will be sticking to her deal with some sought after changes to the backstop. If this is the planned way forward it may be doomed to failure, but we’ll have to wait and see

Consumer confidence in the US fell in January to it lowest level in more than two years (though it still remains high in absolute terms), perhaps partly weighed down by the on-going government shutdown

China’s economy expanded by 6.4% year-on-year in the final quarter of 2018, down slightly from 6.5% in Q3. For 2018 as a whole GDP growth averaged 6.6%, having come in at 6.8% in 2017

The ECB meets this Thursday against the backdrop of weaker Euro area growth recently and continued subdued underlying inflation. It has ended its monthly bond purchases and so the focus now will be on its so-called “forward guidance” on interest rates, which currently says that the ECB expects its key interest  rates to remain at their present level at least through the summer of 2019

Data due this week includes the latest labour market report in the UK tomorrow (Tuesday) and flash PMIs in the Euro area and US on Thursday