Markets seeking direction

Markets generally remain range-bound and are seeking direction, perhaps tomorrow’s inflation data in the US will provide some. In FX the main currency pairs are not doing much, with the euro a touch firmer against sterling at 86.1p and trading at $1.0940 against the dollar while the pound has slipped to about $1.27.

Elsewhere in markets, US and UK bond yields closed marginally lower yesterday but German yields ended a touch higher, while equities gave up some of Monday’s gains with both European and US stocks in the red for the day.

The labour market in the Euro area has remained resilient to date despite the sharp slowdown in the pace of economic growth. The unemployment rate dipped to 6.4% in November according to the latest reading, matching last June’s record low and down from 6.7% a year earlier.

ECB member Centeno, says “the most recent developments on inflation…have obviously brought the moment of easing (monetary policy) closer to us,” adding that the central bank will have to decide when to cut interest rates “sooner than we thought until recently.”

It is very quiet on the economic data front today with no top-tier releases scheduled. As mentioned, tomorrow the focus will be very much on CPI inflation data in the US, while Friday we get UK GDP for November.