Euro off its lows

Having lost ground fairly steadily against the dollar recently, the euro has managed to bounce off last week’s near six-month low of just shy of $1.18, helped by slightly softer than expected US inflation data, to trade this morning more than a cent higher at around $1.1950. Whether this is the start of a sustained euro rally remains to be seen, though

Sterling lost ground against both the euro and the dollar following last Thursday’s Bank of England interest rate decision, though it ended the week little changed from the previous Friday’s close at around 88p and $1.35 respectively. The Bank of England left interest rates on hold (at 0.5%) but said gradual albeit limited increases are likely over the next few years, although the market is not fully convinced there’ll be any hike this year

US 10-year bond yields tested 3% in the middle of last week but came back off this level  subsequently, closing out Friday trading at around 2.95%, while equivalent German and UK yields ended the week at 0.56% and 1.44% respectively

BOE Governor, Mark Carney, last week described the UK labour market as ‘reassuringly strong’, despite the slowdown in GDP growth in the first quarter of this year. Wednesday sees the release of the latest labour market report, with the unemployment rate expected to have averaged 4.2% over the first three months of 2018, according to the consensus forecast, down from 4.4% in Q4 2017, and annual earnings growth forecast to have picked up to 2.9% from 2.5% over the same period

Other data this week include a second estimate of Q1 GDP growth in the Euro area (Tuesday) – the first estimate showed the economy expanded by 0.4% q-o-q – as well as the final CPI reading for April  (Wednesday), while retail sales are due in the US (Tuesday)