Euro sets new 2024 low versus dollar

The euro traded down to a 2024 low of $1.0595 against the dollar yesterday and is hovering just above this at $1.0605 this morning. Sterling’s slide against the US currency accelerated during the course of the session – falling to a low of $1.2720 – and it is trading at around $1.2735 at the start of play today. EURGBP is a little firmer as a result, back up at around £0.8320. The key data release today is the CPI report for October in the US. Higher than expected inflation readings – in the context of concerns that President-elect Trump’s prospective policies will be inflationary – would almost certainly see the dollar extend its gains.

US bond yields rose further yesterday with 2-year and 10-year yields increasing by around 10bps and 12bps to about 4.35% and 4.45% respectively, still a good bit below their year to date highs of 5.0% and 4.70%. UK yields followed US yields most of the way higher, while German yields ended flat to marginally up on the day.

European equity markets gave up all of Monday’s gains – and then some – shedding more than 2%, while US equities retreated a little from their previous day’s record highs, ending slightly lower on the day.

ECB member Kazaks says ”the base scenario at the current moment is to continue lowering
(interest) rates step by step,” adding that the direction of travel is clear albeit it depends on how the economy and inflation evolve.

Today’s CPI data in the US are expected to show headline and core consumer prices rose by 0.2% and 0.3% month-on-month respectively in October, which would push the annual rate of headline inflation up to 2.6% from 2.4% in September and leave the core inflation rate unchanged at 3.3%.