Euro on back foot

The euro has fallen into the bottom half of the $1.05 to $1.15 range against the dollar it has occupied for the past 18 months or so. It weakened by more than a cent to sub $1.09 last week after the ECB indicated that it may extend QE beyond the provisionally planned end date of 2017

Sterling strengthened to 89p against the single currency, helped by stronger than expected UK inflation data, and is now almost 3% off its recent lows (of circa 91.5p)

European equity markets ended little changed on Friday but outperformed over the week (rising by almost 2%) led by a strong rally in financial stocks

There was some respite for core bond markets after the recent sharp sell-off. German 10-year yields fell by around 8bps and are now back to 0%, while equivalent US 10-year yields ended the week 6bps lower at 1.74%

It seems Spain will finally soon have a new (minority) government after the Socialist party agreed to abstain in a vote that would allow caretaker PM Rajoy assume office

Data due this week include third quarter GDP in the UK and the US (on Thursday and Friday respectively)