Main currency pairs steady

The main currency pairs are treading water ahead of US inflation data tomorrow and the ECB meeting on Thursday. The euro and sterling traded up to intra-day highs of around $1.0595 and $1.28 against the dollar respectively in yesterday’s session but are back down at about $1.0550 and $1.2750 this morning, while EURGBP continues to trade sideways just below the £0.83 level.

It was quiet enough in government bond markets yesterday. US yields were marginally higher on the day, but German and UK yields finished broadly flat. In equity markets, European stocks chalked up modest gains (+0.3%) while US indices ended in the red, shedding around half a percent or so.

US households’ expectations about their financial situation over the next year improved considerably in November according to the New York Fed’s latest Survey of Consumer Expectations, with the share of households expecting a better financial situation rising to its highest levels since February 2020. Households’ expectations for inflation over the next 1- and 3-years nudged up slightly last month, to 3% and 2.6% respectively.

In the Euro area, the Sentix Investor Confidence Index fell quite sharply in December, reaching its lowest level since November 2023, with investors’ assessment of current and future economic conditions both deteriorating this month.

It is another extremely quiet day ahead in terms of economic data, with the November small business optimism index and Q3 Productivity & Costs report due in the US.