Dear Reader,

Today's overview of economic news and market action:

• Investor sentiment remained subdued yesterday …
• US rates firmed modestly yesterday following remarks from Fed Governor Waller …
• Currency-wise, the dollar was in the ascendancy …
• Sees EUR/USD open this morning between $1.08-1.09 …
• GBP/USD is near the midpoint of $1.26-1.27 …
• EUR/GBP is just below 86p …
• Sterling is slightly firmer in early trading today, amid above consensus UK CPI data …
• Today, the final reading of EZ HICP, and US retail sales/industrial production (all Dec) are due …

Markets May Be Overly Optimistic on Rate Cuts

Further significant declines in headline and core inflation rates look to be in store this spring virtually everywhere, as large price increases a year earlier drop out of the annual comparison. 

Further Marked Fall in Inflation Needed for Rate Cuts

Further significant declines in headline and core inflation rates look to be in store this spring virtually everywhere, as large price increases a year earlier drop out of the annual comparison.

World economy grew at a very modest pace in 2023. Subdued growth expected again in 2024, with continuing weak performance by most advanced economies in particular. Inflation fell sharply last year and further moderation in price pressures anticipated in 2024.

Renewed downturn in manufacturing order books, but business optimism improves slightly

The AIB Ireland Manufacturing PMI® pointed to worsening business conditions as 2023 drew to a close, representing a setback after the stabilisation seen during November.

Service sector expansion sustained in December as business outlook for 2024 improves

The December AIB PMI® survey data signalled a further rise in service sector activity, extending the current growth sequence that began March 2021.