Dear Reader,

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

• Equity markets stabilised yesterday …
• Market rate hike expectations continued to firm …
• However, the action on currency markets was confined to tight ranges …
• Sees EUR/USD open this morning in the lower half of $1.07-1.08 ….
• GBP/USD remains near the midpoint of $1.23-1.24 …
• EUR/GBP is just below the 87p handle …
• US core-PCE inflation (April) the main data highlight today …
• US debt ceiling talks also in focus, with reports that a deal could be close …

PMI eased back to 48.6 in Apr, indicating a further softening in business conditions. New orders, including exports, and output fell. Meantime, there was a notable easing in inflation Traditional industrial production rose sharply in Mar, leaving it up by 2.3% QoQ and 7% YoY in Q1.

UK Economy Down, But Not Out

The Bank of England’s (BoE) latest set of detailed economic forecasts show it is no longer expecting a recession in the UK. The forecasts are contained in its quarterly Monetary Policy Report for May 2023.

Life in the old buck yet

The dollar was in the ascendancy from mid-2021 through to autumn 2022 as hikes in US interest rates, rising US bond yields and elevated geo-political tensions drove the currency to twenty year highs