Dear Reader,

Today's economic news and market action:

• Cautious tone to investor sentiment persisted yesterday …
• S&P 500 fell by 1.6%, Euro Stoxx 50 flat for the day …
• Disappointing data saw US rate expectations soften by circa 10bps …
• Weaker than expected data and the fall in US rates weighed on the dollar …
• EUR/USD opens at the $1.08 threshold …
• GBP/USD is operating in the lower half of $1.23-1.24 …
• EUR/GBP is changing hands in the top half of 87-88p …
• USD/JPY is trading back near ¥128 …
• Today, the ECB monetary policy account and central bank speeches in focus …

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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.

Inflation at very high levels, which combined with other headwinds such as the sharp tightening of monetary policy, are expected to act as a significant drag on global economic activity in 2023

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...