1. FX Outlook
  2. Daily FX Report



Risk appetite firmed again in early Europe on Friday following the latest developments in China. The Beijing authorities announced that there would be a targeted and precise approach to zero covid cases amid a further strong increase in daily cases. There will be a relaxation in quarantine and travel restrictions which boosted optimism over a rebound in the Chinese economy which underpinned risk appetite and also boosted Euro demand on Friday.

Reports that Russian forces had moved out of Kherson also helped underpin Euro confidence to some extent.

The dollar was unable to regain any territory during the day and the Euro posted highs close to 1.0330 after the New York open. The dollar remained firmly on the defensive later in the session and the Euro posted further gains to 3-month highs around 1.0360 amid the slide in US currency sentiment.

In comments on Sunday, Fed Governor Waller stated that the central bank November statement was designed to signal a step-down to 50 basis-point rate hikes, but added that the CPI report was just one data point and that markets are way out in front. He added that the Fed still has a lot of work to do and that rates will stay high for a while. Waller’s comments triggered a dollar correction with the Euro retreating to 1.0300 before settling around 1.0315 and Fed rhetoric will remain important.




The dollar was unable to regain any ground into Friday’s New York open with underlying confidence still notable depressed following Thursday’s weaker than expected US inflation data. The dollar registered further sharp losses on the day with a slide to the 140.00 area against the yen.

The University of Michigan consumer confidence index dipped to a 4-month low of 54.7 for November from 59.9 the previous month and significantly below consensus forecasts of 59.5. There was a sharp retreat in the current conditions index with the expectations component also posting significant losses on the month.

The 1-year inflation expectations index edged higher to 5.1% from 5.0% with the 5-year index at 3.00% from 2.9%. The 10-year yield retreating to just above 3.80% after the data and the dollar posted further losses to below 139.00 after the data with further losses to just below 138.50 before a limited correction.

Bank of Japan Governor Kuroda reiterated that the central bank will stick to the very loose monetary policy with a need to watch wages growth closely. He reiterated that sharp currency moves are undesirable. The Chinese yuan posted strong gains as China confirmed revisions to coronavirus policies and also announced a major support package for the property sector. The dollar found support below the 139.00 level against the yen and strengthened to near 140.00 before settling around 139.35.




There was only limited reaction to the latest UK data with a weaker than expected GDP reading for September offset by a smaller than expected contraction for the third quarter. Although there will be key domestic elements next week, the immediate market focus was more on international developments.

Bank of England Governor Bailey stated that more interest rate hikes are likely over the next few months while efforts to bring inflation under control will take 18 month to two years, but he was hopeful that inflation would peak over the winter. Overall confidence in the UK fundamentals remained fragile.

The NIESR was more cautious and stated that interest rates would probably have to increase interest rates to 4.75% to bring inflation back to target.

Bank of England MPC member Tenreyro, however, maintained a dovish stance as monetary policy has already been tightened significantly, but the effects on demand have yet to be seen.  She also stated that interest rates should not be increased to above 3.0% in 2023 and should then cut rates in 2024 as rates at this level would further reduce output below potential and there was a risk of over-tightening. Tenreyro also commented that there were signs that the labour market is softening.

Sterling continued to take advantage of dollar weakness with 12-week highs above 1.1850 while the Euro rebounded to above 0.8750.

There was a correction on Monday with a retreat to around 1.1750 against the dollar with the Euro around 0.8770 amid a lack of confidence in UK fundamentals.




Swiss National Bank Chair Jordan stated that monetary policy is not sufficiently restrictive to lower inflation and the bank is prepared to take all measures necessary to restore price stability. Futures markets indicated a 65% chance that the central bank would raise rates by 50 basis points at the December policy meeting.

The rhetoric triggered further franc buying with the Euro sliding to near 0.9750 before stabilising while the dollar posted sharp losses to near 0.9450.

The dollar traded around 0.9480 on Monday amid a limited US recovery with the Euro around 0.9765.


Technical Levels

141122 Tech (1)


141122 Cal (1)




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