Euro strengthens to one year high

The euro strengthened to nearly 89p versus the pound and just under $1.14 against the dollar, while core and periphery European government bond yields rose

German and French 10-year yields rose by circa 14 basis points on the back of comments by ECB president Draghi that all signs now point to a strengthening and broading recovery in the Euro area and that deflationary forces have now been replaced by reflationary ones. Draghi adding that a considerable degree of monetary accommodation is still needed for inflation dynamics to become durable and self-sustaining. Nevertheless as the economy continues to recover, the central bank can accompany the recovery by adjusting its policies – which seems to be a signal towards tapering its asset purchasing programme

The IMF cut its US growth forecast to 2.1% for this year and next – from its previous projection of 2.3% and 2.5% respectively in its April World Economic Outlook – noting that it had removed the assumed fiscal stimulus of President Trump’s tax cuts and infrastructure spending from its forecast  due to uncertainty about their implementation

In busy day for Fed central bank speakers yesterday, Fed Chair Janet Yellen spoke in London on a number of issues ranging from asset price valuations to the likelihood of another financial crisis in our lifetime. She indicated that while inflation in the US has slowed, economic growth is relatively firm, adding it will be appropriate to raise interest rates very gradually to levels that are still low

In the UK house prices surprised to the upside this morning, increasing by 3.1% y-o-y in June after slowing to 2.1% last month – its slowest rate of increase since mid-2013

Relatively quiet day on the data front with retail sales in Ireland due