Euro holding its gains

The euro hit an intra-week low of $1.11 against the dollar last Thursday, before rebounding to $1.12 after the release of softer than consensus economic data out of the US. The single currency is holding onto these gains this morning, with some relief in the market that the populists, though doing well in places in the European Parliament elections over the weekend, didn’t advance as much as was perhaps feared

Amid high political drama in the UK last week, sterling lost some more ground against the euro to trade at around the 88p level,  though it too rebounded against the dollar late in the week, moving back up to over $1.27. With Prime Minister Theresa May announcing her departure, the runners and riders are lining up to replace her, with (to date) eight Tory MPs announcing their candidacy, including a good smattering of Hard Brexiteers who say there are prepared to take the UK out of the EU without a deal

Bond yields in the core markets fell on the back of the soft US data, which suggest GDP growth has slowed  from the robust rate of over 3% in the first quarter of this year, with US 10-year yields closing out the week about 7bps lower at just over 2.30%

Data due this week include the Euro Area Economic Sentiment Indicator (Tuesday); German CPI inflation (Friday); and consumer spending and PCE inflation in the US (Friday)