Dear Reader,

Today's economic news and market action:

• Mixed tone to investor sentiment yesterday.
• Currency-wise, sterling was holding a firmer tone.
• Reflected in EUR/GBP below 88p and GBP/USD above $1.23.
• Elsewhere, EUR/USD has mostly been in a narrow range near $1.08.
• Yen weakened overnight following BoJ meeting.
• UK CPI data releases this am showed headline inflation easing to 10.5%.
• Busy US macro diary today, includes retail sales and industrial production data.

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Having been very much to the fore for the first three quarters of last year, the dollar lost some ground in the final months of 2022. A perfect storm of rising US interest rates and bond yields, and a surge in commodity prices drove the greenback higher up until around the end of September.

Dollar Losing Some Sparkle...

The coming year seems likely to be characterized by further rate hikes in the opening half of 2023, with monetary policy being put on hold thereafter...

AIB's Economic Research Unit provides regular commentary on the domestic and global economy, currency and interest rate markets, and special commentary on key events...