Euro marginally firmer

The euro is marginally firmer against the dollar and sterling this morning trading back above $1.08 and at about 87p respectively, while the pound is hovering just below $1.2450 against the US currency

US and UK government 10-year yields rose by 20-25bps over the course of last week to around 3.65% and 4% respectively, while equivalent German yields increased by about 15bps to just shy of 2.45%

ECB’s Lagarde says the central bank has “covered a large chunk of the journey toward taming inflation and bringing it back to our target,” but adds that “we are not done (raising interest rates) yet, we are not pausing based on the information I have today.”

Fed’s Kashkari says “If the (central bank) chooses to skip a meeting (and not raise interest rates) because we want to get more information, I could make the argument why that makes sense,” but notes that this is “very different in my mind than (saying) we’re done (hiking rates).”

Economic data due this week includes CPI inflation in the UK on Wednesday – the consensus expects a notable decline in the headline inflation rate to 8.2% in April from 10.1% in March, thanks to lower energy price inflation, but sees core inflation (i.e. excluding energy and food prices) remaining steady and sticky at 6.2%

Other data scheduled for this week includes flash PMIs for April in the Euro area, UK and US tomorrow (Tuesday), and PCE inflation in the US on Friday. Meanwhile, the Fed publishes the minutes of its early May monetary policy meeting on Wednesday, and markets will also be closely watching progress, or otherwise, in relation to negotiations on the debt ceiling in the US