1. FX Outlook
  2. Daily FX Report


After a brief respite on Tuesday, financial-sector fears returned with a vengeance on Wednesday and the main focus switched to Europe. After the open, Credit Suisse announced that the Saudi National Bank would not be increasing its stake in the troubled bank. The news triggered fresh fears over the outlook for the bank, especially given a potential contagion effect from SVB. There was a fresh slump in its share price and a wider contagion effect with European banks under heavy pressure.

There was also a sharp re-pricing of ECB interest rate expectations with markets considering that the chances of a 50 basis-point rate hike had dipped to around 20%. ECB council member Constancio also commented that the bank should hike rates by a maximum of 25 basis points this week.

The combination of Credit Suisse fears and ECB repricing triggered heavy selling pressure on the Euro.

US retail sales declined 0.4% for February and in line with consensus forecasts after a revised 3.2% jump previously. Underlying sales also met expectations with a 0.1% decline while the control group recorded a 0.5% gain. The New York Empire manufacturing index dipped sharply to -24.6 for March from -5.8 previously and much weaker than consensus forecasts of -8. There were also notably negative readings for new orders and production. Employment continued to decline on the month and there was a limited easing of inflation pressures. Companies were less confident in the outlook and inflation pressures are expected to decline more substantially.

Wall Street losses reinforced market fears over contagion and the Euro dived to 2-month lows around 1.0515 against the dollar. There was a tentative recovery later in the session and the Euro recovered some ground on Thursday after the Swiss National Bank pledged support for Credit Suisse.

The Euro traded just close to 1.0600 while the ECB policy decision and forward guidance from the bank will inevitably trigger further currency volatility on Thursday.


The yen gradually gained ground after Wednesday’s European open as equities came under renewed pressure and fear then intensified with yen buying gathering pace. From highs close to 135.00, the dollar posted sharp losses to the 133.50 area ahead of the US open as risk conditions dominated.

US producer prices declined 0.1% for February compared with expectations of a 0.3% increase with the annual increase slowing to 4.6% from 5.7% and well below expectations of 5.4%. Core prices were unchanged on the month with the annual rate slowing to 4.4% from 5.0% and also below expectations of 5.2%.

There was a fresh re-pricing of Fed Funds futures with markets now considering no change in interest rates is the most likely outcome for next week.

The NAHB housing index strengthened to 44 for March from 40 previously. US yields also declined sharply with the 2-year yield sliding to 6-month lows at 3.75% before a recovery to 3.88%. With equities posting sharp losses, the dollar slumped further to lows at 132.25 against the yen before a recovery to 132.90.

There was further choppy trading in Asia amid uncertainty surrounding the global banking sector with the dollar settling around 133.15 in early Europe. 


In macro-economic terms, there were no major surprises in the budget. There was an upward revision to short-term GDP forecasts with the OBR no longer forecasting a technical recession, although GDP is still forecast to shrink slightly in 2023. The longer-term growth forecasts were lowered which maintained high debt levels and little room for fiscal manoeuvre. The budget was overshadowed by fresh turmoil in financial markets and heavy losses in the banking sector. The FTSE 100 index came under heavy pressure with a slide of close to 4.0% on the day.

The slide in financial equities undermined expectations of a Bank of England rate hike next week with risk fears also undermining support. Given the scale of pressure on equities, the currency was still relatively resilient. Sterling posted sharp losses to lows just above 1.2000 against the dollar before a tentative recovery. The Euro dipped sharply to 12-week lows at 0.8720 before a recovery to 0.8765. It traded around 1.2070 against the dollar on Thursday with the Euro around 0.8785.


Risk conditions dominated during Wednesday, especially with Switzerland in the centre of the storm amid major concerns surrounding Credit Suisse. Fears over the bank limited the potential for defensive franc support during the day. The Euro held close to 0.9800 while the dollar surged to highs around 0.9325. After the European close, the Swiss national Bank stated that it was prepared to provide liquidity if necessary. The backstop provided an element of relief for global markets. The Euro recovered to 0.9860 while the dollar traded around 0.9300.

Technical Levels 

Tables 1 (99)

Economic Calendar

Fx Daily Calendar 16032023X



This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

Sign up to get the latest market insights

We will email you each time a new report has been published.

You might also be interested in...