Euro nudging higher

The euro is creeping higher on the foreign exchange markets. It briefly traded up to $1.10 against the dollar yesterday and is sitting not much below there this morning, and is now within shouting distance of 90p against sterling, while the pound has eased back a touch against the dollar to around $1.22. Both US and European equities closed higher yesterday, while core bond yields edged up though they remain towards the top end of their recent tight trading range

Bank of England Governor Andrew Bailey says the central bank is keeping the option of negative interest rates in the UK under review (the Bank’s main policy rate is currently 0.1%): “given what we’ve done in the past few weeks, it should come as no surprise to learn that of course, we’re keeping (all) tools under active review in the current situation…we do not rule things out as a matter of principle…that would be a foolish thing to do…that doesn’t mean we rule things in either.”

The minutes of the Fed’s most recent monetary policy meeting note that the “coronavirus outbreak was causing tremendous human and economic hardship across the United States and around the world (with) the measures taken to protect public health inducing sharp declines in economic activity and a surge in job losses”, and say that the Fed is “committed to using its full range of tools to support the U.S. economy in this challenging time”

The EU’s Michel Barnier believes a “new dynamism” is needed in the next round of post-Brexit UK-EU trade talks if they are to avoid a “stalemate”, but again notes that the UK “cannot expect high-quality access to the EU single market if it is not prepared to accept guarantees to ensure that competition remains open and fair”.

Data due today includes flash PMIs for the major economies, while the Q1 2020 Labour Force Survey is published here at home