Main currency pairs tread water
US equity markets advanced again and US bond yields continued to grind lower, but the dollar was little changed on the day. The euro and sterling are trading at about $1.1380 and $1.3390 respectively this morning, while EURGBP is hovering in and around £0.85, all more or less where they were yesterday morning. There’s plenty of economic data for markets to digest today, including preliminary estimates of first-quarter GDP in both the Euro area and the US and PCE inflation for March in the US.
US 10-year bond yields nudged down again yesterday, falling by almost 5bps to 4.17%, leaving them more or less where they were on the eve of Trump’s “Liberation Day” tariffs announcement on 2 April (having declined by more than 30bps from their recent highs), while 2-year yields also fell as Fed rate cut expectations firmed following some softer than expected US economic data. Elsewhere in bond markets, both German and UK yields were slightly lower on the day. In equity markets, European stocks closed marginally in the red, while the S&P 500 rose for a sixth straight session, finishing around 0.6% higher to take its gains from its April 8 lows to almost 12% (albeit still down some 10% from its 2025 highs in February).
Consumer confidence in the US fell for a fifth month in a row in April according to the Conference Board’s measure, and has now more than reversed the bounce in sentiment that accompanied Trump’s election victory in November, while separately, the number of job vacancies fell for a second month in a row in March although job layoffs remained low. In the Euro area, economic sentiment deteriorated again this month, according to the Economic Sentiment Indicator published by the European Commission, amid declines in both business and consumer confidence.
Regarding today’s economic data, first-quarter GDP growth is expected to have remained subdued in the Euro area, at 0.2% q-o-q, and to have slowed sharply in the US, to essentially 0% q-o-q, with a negative reading possible due to a tariffs-related surge in imports in the quarter. Both headline and core PCE inflation in the US are forecast to have slowed in March, to 2.2% and 2.6% respectively from 2.5% and 2.8% in February, which would be good news for the Fed though of course it’s more concerned about a potential tariffs-related spike in inflation over the coming months. Other US data due include the Employment Cost Index for Q1 and the ADP employment report for April.