Stress in the banking sector could see a further tightening of credit conditions

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.

Higher building costs, shortages in relation to workers, increased uncertainty regarding the economic outlook, availability of funding, and delays in the planning process are all major headwinds impacting the level of future supply

With inflation falling for the first time in 17 months in November, the ECB may opt for a more modest 50bps hike this week

The market is expecting that rates will peak at 1.25% by mid-2023, and remain at this level into the end of next year.

The Delta variant delayed the full re-opening of the economy by a number of weeks, and failure to stop it spreading risks further challenges, while Brexit could also dampen investment and trade over the medium term.

The global economy looks well positioned to register a significant rebound in activity in the second half of the year but slow vaccine rollout in developing economies and the threat of vaccine-resistant virus mutations pose risks

General weakening of the dollar and improved investor sentiment has reduced safe-haven demand for the US currency writes John Fahey

As government supports are removed we would expect lay-offs to rise as the pandemic prompts permanent business closures, writes John Fahey