1. FX Outlook
  2. Daily FX Report



The Euro held steady in early Europe, but failed to make headway with further selling interest above the 1.0700 level against the dollar.

According to its latest monthly report, headline inflation has peaked, but core inflation is set to decline only tentatively in the coming months. In this context, it added that high inflationary pressures remain in place with the second-round effects of wages growth expected to keep inflation above target for an extended period. It added that the short-term outlook for the economy is more favourable than a few months ago. 

Comments from ECB President Lagarde will be watched closely on Tuesday for any further forward guidance on interest rate hikes.

According to flash data, EU consumer confidence improved slightly to -19.0 for February from -20.7 the previous month and in line with consensus forecasts.

Narrow ranges prevailed, especially with US markets closed for the Presidents Day holiday and the Euro settled around 1.0685 against the US dollar.

The business confidence data will be important on Tuesday. Euro-Zone consensus forecasts are for a slightly faster rate of growth in services while manufacturing still in contraction. US manufacturing and services sectors are both expected to remain in contraction territory.

Markets will continue to monitor Ukraine developments with Russian forces expected to intensify military offensive operations around the 1-year anniversary of invading Ukraine at the end of this week. There is likely to be an element of caution ahead of Wednesday’s Federal Reserve policy minutes.

The dollar edged higher on Tuesday as equities drifted lower and the Euro traded around 1.0670.




The dollar was held in narrow ranges during Monday, especially with bond markets closed for a holiday. The dollar continued to find support below the 134.00 level against the Japanese currency and settled around 134.20. There was be a reluctance to engage in aggressive yen trading ahead of scheduled parliamentary testimony from Bank of Japan Governor nominee Ueda late in the week with the potential for sharp yen moves on his comments.

Japan’s PMI manufacturing index dipped to 47.4 for February from 48.9 previously, the fourth successive decline and the lowest reading since August 2020. The non-manufacturing index, however, posted the highest reading for 8 months with a mixed outlook.

Bank of Japan Governor Kuroda and Finance Minister Suzuki stated that FX moves are being watched closely. Kuroda added that wages growth is set to accelerate amid a tight labour market. The overall market was limited with the dollar securing net gains to near 134.50 in early Europe amid a slightly firmer US currency trend.  




There were no significant domestic developments during Monday and global conditions were also notably subdued. There were gains across the commodity complex with support from hopes that the Chinese economy will rebound strongly this year. These hopes also provided an element of Sterling support during the day. The UK currency found support above the 1.2000 level against the dollar and settled little changed around 1.2040.

The Euro edged lower to 0.8875 during the day amid a wider net retreat for the Euro.  

The PMI data will be released on Tuesday with expectations of slight net improvement, but with manufacturing and services still in contraction territory.

The latest government borrowing data recorded a surplus of £5.4bn for January after the substantial deficit for December, but the surplus last year was £12.5bn. January is always a strong month due to tax receipts and there was huge spending on energy support measures with interest payments also continuing to increase.

Sterling edged lower to around 1.2010 against the dollar, although this was primarily a function of weaker US equity futures.   




Total Swiss sight deposits increased slightly to CHF526.8bn in the latest week from CHF525.6bn the previous week. There have been fluctuations over the past few weeks, but with only a limited net change, which suggests the National Bank is now broadly comfortable with the level of liquidity in the economy.

National Bank vice-chair Schlegel stated that the bank was still willing to intervene in currency markets if necessary. He reiterated that there could be action to buy or sell the Swiss currency as required. Schlegel also reiterated the need to bring inflation back into the 0-2% target which helped support the franc.

The Euro retreated to 0.9860 against the franc while the dollar settled around 0.9230 on Monday before edging higher to 0.9250 on Tuesday.


Technical Levels 

Fx Daily Technical Levels 21022023


Fx Daily Calendar 21022023



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