Dear Reader,

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

• Cautious tone to investor sentiment yesterday, partly due to mixed US inflation data …
• Dollar under some downward pressure following the release …
• Meantime euro supported by a firming of Eurozone market rate expectations …
• EUR/USD opens this morning in the top half of $1.09-1.10 …
• GBP/USD is changing hands near $1.25 …
• EUR/GBP is just below the 88p mark …
• EZ industrial production (Feb) and US producer price inflation (Mar) due today …

Reversal of Fortune

• March has seen a welcome sharp fall in headline inflation in the Eurozone.
• Wholesale energy prices have been in marked decline since last summer and are now below the levels that prevailed ahead of the Russian invasion of Ukraine
• A recent excellent paper from the ECB (How tit-for-tat inflation can make everyone poorer) clearly demonstrates that soaring profit margins are mainly responsible for the marked pick-up in domestic inflation

A Fine Margin

There was a welcome sharp fall in headline inflation in the Eurozone in March as the sharp jump in energy prices following the Russian invasion of Ukraine early last year started to drop out of the annual rate. Inflation fell to 6.9% from 8.5% in February and is now well below the peak level of 10.6% hit last October.

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.