Euro under pressure

The euro is under pressure this morning, having rallied to over $1.18 against the dollar at one point yesterday, trading almost a cent lower at under $1.1750 and therefore not far off this week’s low of around $1.1720. Softer than expected French PMI data released a short while ago is not helping the single currency’s cause

There was some respite for Italian bonds yields yesterday after their relentless March higher recently, with 10-year yields ending about 5bps lower at 2.32%. This looks like it might prove fleeting though, as yields are heading north (albeit modestly so) again the morning (which isn’t helping the euro’ cause either)

Sterling is not much changed against the euro this morning ahead of CPI inflation data in the UK due shortly, trading just below 88p, though it has weakened to under $1.34 against the dollar. The consensus expects the annual headline rate of inflation to have remained at 2.5% in April – a lower reading than this and sterling may lose ground (and vice versa). Meanwhile, the Bank of England Governor, Mark Carney, has reiterated that a gradual increase in interest rates is the most likely scenario over the next few years

Flash PMI data for the Euro area are also due this morning. The consensus expects an unchanged reading of 55.1 in May, though the weaker than forecast French data already released points to the risk of a lower reading

The Fed publishes the minutes of its recent monetary policy meeting today as well