Euro steady against dollar

The euro was little changed against the dollar over the course of last week, trading in a narrow range around $1.12– only briefly getting up toward $1.13 or below $1.12 – but against sterling the single currency lost a small amount of ground later on in the week dipping down to 90p

US equity markets had a good week, with the S&P closing out Thursday with a 4% gain for the week despite the continuing bad news about the spread of Covid-19 across many US states. Core bond yields rose a few basis points with US 10-year yields getting back up to around 0.67% and equivalent German yields also edged up during the week to end Friday at -0.43%

With the US closed on Friday for the 4th of July holiday, it was a quiet day compounded by relatively little data of note elsewhere. Euro area and UK services PMI’s for June were released, with readings of 48.3 and 47.1 respectively, largely confirming the ‘flash’ estimates which showed a big uptick from May but still below the 50 expansionary level

ECB president Christine Lagarde said on Saturday that the Covid crisis may help shift the euro area towards a more productive and greener economic model. However, this transition will be disruptive, particularly over the next two years, hitting employment and production before it hopefully improves productivity. She added this will probably have a disinflationary impact on inflation in that timeframe before turning inflationary

Relatively quiet on the data front this week, US ISM non-manufacturing and services PMI are due today as are EU retail sales. Central Bank speakers this week include Bostic, Daly and Barkin from the Fed, Haldane from the BoE and Hernandez de Cos from the ECB