Dear Reader,

Here is an overview of today's economic news and market action:

• The dollar was on the defensive for much of last week
• Although, it recovered ground on Friday
• At the same time, the euro was generally firmer on the exchanges
• Interest rate differentials were a factor in the FX moves
• EUR/USD opens this week up near to $1.10
• EUR/GBP trading in 88-89p band
• This week’s macro highlights include flash PMIs for April

Storm Clouds Gathering

• The latest quarterly update from the IMF on the outlook for the world economy published last Tuesday saw little change to its forecasts from those issued in January and last October.
• The first point to note is that historically, a 3% growth rate is quite low for the global economy.
• The IMF comments that the tentative signs this year, that the world economy could achieve a soft landing have receded amid sticky core inflation and recent financial sector turmoil.

Ireland’s manufacturing sector crept back into contraction territory in March. Intakes of new orders and manufacturing production both decreased on the month following some tentative signs of improvement in February and consequently, firms scaled back input purchasing further.

• Economic data have generally surprised to the upside in first quarter, helped by easing inflation. However, possible credit crunch and tighter lending standards new risk to activity
• Central banks continue to hike rates, but expectations of further increases scaled back greatly on signs of stresses in parts of banking system and associated turbulence on financial markets