1. FX Outlook
  2. Daily FX Report


The dollar traded in tight ranges ahead of Thursday’s New York open with caution ahead of the latest US data releases. Overall Euro sentiment held firm, although there was further selling interest above the 1.0900 level. There was also underlying caution ahead of the ECB and Federal Reserve policy decisions next week.

There were no further comments from ECB officials with the central bank in a blackout period ahead of next week’s policy decision.

According to the first reading, US GDP increased at an annualised rate of 2.9% for the fourth quarter of 2022 from 3.2% the previous quarter and above consensus forecasts of 2.6%. Consumer spending increased at a slightly slower rate of 2.2% from 2.3%.

There was a positive contribution from government spending with a technical boost from trade as imports declined, but residential investment declined again.

The dollar posted net gains after the raft of data releases with the recent US currency moves influenced to an important extent by data releases.

The Euro retreated to lows near 1.0850 against the dollar before again finding support close to this level.

The latest US PCE prices data will be released on Friday with expectations that the annual underlying rate will decline to 4.4% from 4.7%. A larger decline would further boost optimism that inflation is moderating and lead to further speculation over a less aggressive Federal Reserve stance. Stronger than expected data would create fresh reservations over the inflation outlook and potentially undermine risk appetite with net dollar gains.

After a renewed retreat, the dollar managed to regain some territory on Friday with the Euro around 1.0870 as month-end positioning had some impact.


The dollar secured a limited net advance into Thursday’s US data, but hit resistance close to the 130.00 level against the yen.

US durable goods orders increased a strong 5.6% for December after a 1.7% decline the previous month and above expectations of 2.5%. Underlying orders, however, recorded a small 0.1% decline after a 0.1% increase the previous month.

US initial jobless claims declined to 186,000 in the latest week from 192,000 the previous week and below consensus forecasts of 205,000, although there was an increase in continuing claims to 1.68mn from 1.66mn previously. The overall evidence continued to suggest a tight labour market.

The Chicago Fed national activity index declined to -0.51 for November from -0.05 the previous month, illustrating that data indicating a weakening economy late in the year. US Treasuries overall lost ground after the US data releases with the 10-year yield edging higher and the dollar posted gains to the 130.30 area against the yen.

Tokyo’s headline inflation rate increased to 4.4% for January from 4.0% and above expectations of 4.0% while the underlying rate increased to 4.3% and the highest rate since 1981. The data maintained expectations that the Bank of Japan would tighten monetary policy later this year which underpinned the yen.

The dollar dipped to lows at 129.50 before a recovery to just above 130.00 amid wider US gains with the Euro just below 141.50.


The CBI retail sales report recorded a headline reading of -23 for January from 11 previously and well below consensus forecasts of -5. Retailers also expect sales to decline in February, but at a slower rate. Supplier orders declined again and stocks remained too high, reinforcing near-term concerns over the outlook.

Sterling was, however, broadly resilient during the day as risk appetite held steady and market positioning ahead of the central bank policy decisions.

Sterling held a firm tone ahead of the New York open with a further test of resistance above 1.2400 against the dollar while the Euro edged below the 0.8800 level.

Despite further unease over the economic outlook, there was further speculation that the Bank of England would have to maintain a tough stance in order to curb inflation which provided an element of Pound protection. Sterling did decline against the dollar after the batch of US data releases. Sterling traded around 1.2370 against the dollar on Friday as the dollar regained some ground while the Euro traded just above 0.8780.



The Swiss franc overall was held in relatively tight ranges during Thursday as markets considered the outlook for the global economy and monetary policies. The Euro held just above the 1.0000 level amid expectations of a hawkish policy stance. The dollar dipped to lows just below 0.9160 before regaining the 0.9200 level after the US data. The Euro nudged higher on Friday with the dollar trading around 0.9220.

Technical Levels 


Tables 1 (89)



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