Euro holding onto gains

The euro is holding onto its recent gains against the dollar, trading at around $1.1450 this morning having hit a 2018 low of about $1.12 around this time last week. It’s been more a case of the dollar weakening over this period though, as the market has reassessed the extent to which the Fed will raise interest rates next year (it now sees the Fed doing less on this front that it had previously thought, though the market can be fickle and things could change again!)

Sterling is a little softer against the euro trading at just over 89p this morning. The DUP voted against the government on a budget-related matter in parliament last night (despite the confidence and supply arrangement), saying it was a warning to Theresa May regarding her Brexit policy

Equity markets had a poor start to the week, with US indices in particular under pressure led by a 3% fall in the Nasdaq. Bond yields in the US were slightly lower on the day, and have fallen quite a bit over the past week – by about 20bps in the case of 2-year yields – on the revised outlook for the Fed

The Bank of England Governor, Mark Carney, and some of his colleagues will appear before parliament’s Treasury Select Committee this morning to discuss the Bank’s November Inflation Report, while on the data front the CBI in the UK publishes its latest manufacturing survey with housing starts due in the US