Main currency pairs little changed

It was relatively quiet in FX markets yesterday given Thanksgiving in the US. Both the euro and sterling are little changed against the dollar this morning trading at $1.09 and $1.253 respectively, with EUR/£ still hovering just above 87p.

In government bond markets, UK 10-year yields rose by around 10bps after stronger than expected PMI data in the UK, while equivalent German yields increased by about 5bps. Meanwhile, European stocks ended in positive territory again albeit gains were modest

PMI data in the UK suggest the economy steadied in November, with the composite index moving out of contractionary territory (rising to 50.1 from 48.7) led by a recovery in activity in the services sector.  Separately, consumer confidence improved this month according to the GfK index although it remains very subdued.

The Euro area economy looks set to contract again in the final quarter of the year judging by the latest PMI readings, with activity in both the manufacturing and services sectors falling in November leaving the composite PMI below the key 50 level for a sixth consecutive month.

ECB member Holzmann says “the probability that interest rates will rise again is no less likely than that there will be a reduction,” noting that inflation remains high despite moderating recently, while his colleague Nagel says “it would be a mistake to loosen…monetary policy too early as it would jeopardize the return of inflation to our target of 2%.”

Employment in Ireland rose by almost 102k in the year to Q3 according to the latest Labour Force Survey, an increase of 4% taking the number in work to 2.66m. On a quarterly basis, employment increased by 26.9k, or 1.0%, after a gain of  10.4k (+0.4%) in Q2.

Economic data is light enough today with flash PMIs for November in the US the main release of note.