1. FX Outlook
  2. Daily FX Report


The Euro-Zone recorded a current account surplus of EUR17.1bn for January from EUR13.3bn the previous month, maintaining the underlying improvement seen over the past few months. Narrow ranges prevailed ahead of the Federal Reserve decision with the Euro edging higher to test 1.0800 before settling just below this level.

The Fed increased interest rates by 25 basis points to 5.00%, in line with consensus forecasts and the vote was unanimous. There was a shift in the statement with the committee now considering that rate hikes may be needed as opposed to comments last time that it anticipated that on-going rate hikes would be appropriate.

In the latest projections on interest rates the dot plots forecast rates at 5.1% this year, unchanged from the previous estimate. The 2024 forecast was raised slightly to 4.3% from 4.1%, but the committee still expects that rates will decline next year. There was fresh speculation that rates may have peaked.

Chair Powell remained uneasy over the inflation outlook, especially as there had been no progress in reducing core inflation outside the housing sector. He added that there was still a long way to go in the process of getting inflation back down to 2%.

According to Powell, recent baking events might result in tighter credit conditions which would have an impact on the economy and how the Fed responds. Powell also indicated that credit conditions will be an important element and, in principle, can be seen as equivalent to a rate hike and that monetary policy will have less work to do.

The dollar overall dipped lower following these comments, but pared losses as Powell stated that the baseline scenario is not for a rate cut this year.

The Euro moved to 6-week highs just above 1.0900 before losing ground again as equities dipped lower. As US yields retreated again, the Euro edged back above 1.0900 on Thursday with the dollar index also at 6-week lows as Fed expectations were scaled back and the Euro held a firm overall tone.


US yields moved higher around Wednesday’s US open which underpinned the dollar and the US currency posted gains to highs fractionally above 133.00 before a retreat to 132.65 as yields moved lower again. There was some evidence of weaker consumer spending which curbed potential dollar support.

Following the Fed decision, the 2-year yield dipped to just below 4.00% with the 10-year yield retreating to around 3.50% from high around 3.63% earlier in the session.

As yields declined, the dollar dipped sharply to lows just above 131.00 before attempting to rally.

The monthly Japanese Tankan index recorded a small improvement in the manufacturing and services sectors, but dollar developments remained dominant in Asia.

US yields continued to move lower which sapped dollar support while there was further choppy trading in equities with a tentative recovery after sharp losses late in the US session. The US currency dipped to lows just below 130.50 before a slight recovery to 130.90 with the Euro around 142.80 as the yen lost ground.


Sterling posted gains after the higher than expected UK inflation data, especially as there was a shift in expectations surrounding the Bank of England policy decision this week. Markets moved to price in close to a 100% chance that the central bank would increase interest rates by 25 basis points to 4.25%.

Sterling hit highs just below the 1.2300 level against the dollar with the Euro retreating to near 0.8770.

The CBI industrial orders index dipped to -20 for March from -16 the previous month and weaker than expectations of -15. According to the CBI, output and orders eased in the three months to March while there was a slowdown in inflation pressures with weakening selling-price expectations. Sterling failed to hold the gains and drifted lower into the European close. The Northern Ireland protocol was approved by a larger majority in the House of Commons, but economic developments dominated.

Consensus forecasts are that the Bank of England will raise rates to 4.25% with the rhetoric on a potential pause in hikes watched closely given the change in Fed guidance. Risk trends will also be significant for the Pound. Sterling jumped to 7-week highs around 1.2335 against the dollar after the Fed decision before retreating as equities dipped sharply. Sterling traded above 1.2300 on Thursday with the Euro posting net gains to 0.8855 on expectations of a hawkish ECB stance.


The Swiss franc lost ground again on Wednesday with reduced demand for the Swiss currency. Ahead of the Federal Reserve policy decision, the Euro advanced to 0.9970 with the dollar around 0.9240. The dollar dipped to below 0.9200 after the Fed policy decision and lost further ground to near 0.9150 on Thursday.

Consensus forecasts are for the National Bank to raise interest rates by a further 50 basis points to 1.50% with policy guidance also a key element.

Technical Levels 

Tables 1 (104)

Economic Calendar

Fx Daily Calendar 23032023



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