Euro marginally firmer

The euro has advanced a little against both the dollar and sterling to trade near $1.07 and close to 89p respectively this morning, while the pound is largely unchanged against the US currency at about $1.2050

Equity markets chalked up modest gains at the start of the week’s trading, while in government bond markets, US and German 10-year yields are not much changed from this time yesterday morning at 3.95% and 2.72% respectively

ECB Chief Economist, Philip Lane, says “the current information on underlying inflation pressures (in the Euro area)  suggests that it will be appropriate to raise (interest) rates further beyond our March meeting”, while his ECB colleague Robert Holzmann says a 50bps hike in rates at each of the next four monetary policy meetings may be required

Retail sales in the Euro area rose marginally in January with the 0.3% gain only very partially reversing a fall of 1.6% in December. On an annual comparison, spending was down almost 2.5% on January 2022

Fed Chair Powell testifies to Congress today on the outlook for the US economy and monetary policy – he’s likely to point to further interest rate hikes ahead – while it’s quiet enough on the economic data front with little of note scheduled for release