1. FX Outlook
  2. Daily FX Report



ECB council member Schnabel stated on Friday that further rate hikes will help bring inflation back to the bank’s target. There was little impact with a hawkish central bank stance priced in and the Euro overall tended to drift lower with fragile risk conditions.

The US University of Michigan consumer confidence index recovered further to 66.4 for February from 64.9 the previous month and above expectations of 65.0. There was a significant recovery in the current conditions component, but this was offset by a slight decline in the expectations component.

The 1-year inflation expectations index increased to 4.2% from 3.9% while there was no change in the 5-year expectations index at 2.9%.

The dollar held a firm tone and the Euro continued to lose ground with a retreat to lows just below 1.0670 against the US currency late in Europe.

Philadelphia Fed President Harker stated that the January jobs report didn’t change the outlook for monetary policy. He added that rates need to increase to at least 5.0% and stay there for some time. He also stated that the central bank was not likely to cut rates this year, but may be able to do so in 2024 if inflation starts ebbing.

There was no CFTC data release for the second successive week due to internal technical problems which will increase market uncertainty surrounding overall positioning. The governing SPD lost the Berlin election with the CDU winning the vote for the first time since 1999, while overall risk conditions remained fragile with the Euro around 1.0670 after dipping to 1-month lows just above 1.0650. There will be further short-term caution ahead of Tuesday’s US inflation data.




The yen spiked higher just after Friday’s European open following reports that the government would nominate Ueda as the next Bank of Japan Governor.  The yen posted strong gains given his previous criticism of current policies which suggested that he would want a more hawkish central bank policy. The dollar slumped to lows below 130.00 before recovering strongly as Ueda stated that the current policy is appropriate and that the bank needed to continue with an easy policy.

Chinese new loans increased sharply to CNY4,900bn for January from CNY1,400bn the previous month and above expectations of CNY4,000bn while total social financing surged to CNY5,980bn from CNY1,310bn. The data was unable to provide significant support to risk appetite during the day.

Treasuries overall lost ground with further concerns that the Federal Reserve would need to adopt a more aggressive policy stance to combat inflation.

The US currency moved back above the 131.00 level before stabilising and posted a further net advance to 131.35 at the Wall Street close.

Bank of Japan policy will remain a key element with Governor nominee Ueda set to face parliamentary hearings on February 24th. Reports from bank insiders suggest that Ueda will be data-dependent in setting policy with a dovish stance. The yen lost ground on Monday with reduced speculation that there would be a near-term move to tighten policy. Equity markets overall lost ground amid concerns over US-China relations, but the dollar posted net gains to around 132.20 against the yen.




Sterling was unable to gain significant support from the latest UK GDP data with relief that the economy avoided dipping into a technical recession offset by fears over underling stagnation in the economy. There were also underlying fears surrounding prolonged weakness in the industrial sector while the trade deficit widened in the month. There were particular concerns surrounding trade with the EU, reinforcing pressure for the government to secure improved relations with the EU.

The overall impact was limited with global developments tending to dominate. Dollar strength and reservations surrounding risk conditions pushed Sterling to lows just below the 1.2050 level while the Euro settled around 0.8850 from 0.8825 lows.

The latest report from the Chartered Institute of Personnel Developments continued to indicate that the labour market was tight with a stronger pace of wage increases which will maintain expectations that the Bank of England will have to maintain a tight monetary policy to bring inflation under control.

Sterling was unable to make any headway amid a fragile risk tone and traded close to 1.2050 against the dollar with the Euro edging higher to 0.8860.




The Swiss franc maintained a firm tone on Friday with on-going reservations surrounding the global outlook and reservations surrounding central bank policies.

The Euro retreated to the 0.9860 area while the dollar secured a small net advance to 0.9240.

The Swiss currency was unable to make further headway on Monday and traded around 0.9875 against the Euro with the dollar just above 0.9250.


Technical Levels 

Fx Daily Technical Levels 13022023



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