Euro slips again

The euro lost another 1/2 cent to the dollar yesterday with the single currency moving back to under $1.0475 this morning. The European currency made modest gains against sterling during the day to move to above 86.5p for a time before losing out in the afternoon to back to just above 86p now while the sterling dollar rate remains at $1.21

European equity markets had a down day yesterday following a modest gain on Tuesday, while major US equity indices were more or less flat at the close. Bond yields moved lower yesterday with German 10-year yields down about 11 basis points to 1.51 % while US 10-year yields were down about 7 basis points to 3.1%. European yields across the board fell yesterday with bonds boosted by a (now rare) weaker than expected inflation print in Germany

As measured by the European harmonised measure, German prices fell by 0.1% month-on-month in June, against an expectation of a 0.4% rise. The annual rate of inflation fell to 8.2% from 8.7% in May. However, much of this easing came from weaker prices in the transport component due to policy measures which cut road fuel taxes and lowered the cost of public transport. Other components, such as food, continue to indicate upward pressure on prices

Fed Chair Jerome Powell said the US economy is in “strong shape” and that the Fed “will not allow a transition from a low inflation environment to a high inflation environment”. He said that they “hope (US) growth will remain positive” and the economy is well positioned to withstand tighter monetary policy but the Fed is raising rates “expeditiously” and they are moving rates “into restrictive territory fairly quickly”

Data due today includes Euro area unemployment data and US personal income and spending