1. FX Outlook
  2. Daily FX Report


The German IFO business confidence index strengthened to 93.3 for March from 91.0 previously and significantly above consensus forecasts of 91.1. The current conditions component strengthened to 95.4 from 93.9 and the expectations index also recovered to 91.2 from 88.4. The IFO stated that conditions had improved considerably, especially in key areas such as manufacturing. There were still some reservations over the outlook, although low gas prices will provide further support.

Overall conditions were calmer on Monday with reduced fears surrounding the European banking sector while equity markets were able to recover ground. The calmer tone and relief over the banking sector helped provide underlying support for the Euro and defensive dollar support also faded to some extent.

The Euro gradually gained ground, although the main feature was narrow ranges with the Euro unable to challenge the 1.0800 level during the European session.

ECB council member Schnabel stated that there is no sign of the labour market weakening and she also stated that there were financial stability risks, although the situation is still fragile. Bundesbank head Nagel stated that inflation is still too high and that the central bank must be resolute in the fight against inflation.

Expectations of a hawkish ECB stance continued to underpin the Euro as it settled just below 1.0800 against the US currency.

The dollar lost ground in Asia as immediate banking fears continued to ease and equities made tentative gains. In this environment, the Euro moved above the 1.0800 level and traded around 1.0815 with markets continuing to monitor banking-sector developments closely.


US Treasuries gradually lost ground ahead of Monday’s US open with higher yields tending to underpin the US currency. A recovery in equities also helped curb potential demand for the Japanese currency. The dollar found support below the 131.00 level against the yen and rallied to highs around 131.75.

The Dallas manufacturing index dipped further to –15.7 for March from –13.5 previously, maintaining the run of generally weak regional manufacturing surveys.

Treasuries continued to lose ground with the 10-year yield increasing to around 3.50% and the dollar settled just above 131.50 at the New York close.

Bank of Japan Governor Kuroda stated that it was too early to debate an exit from the very loose monetary policy.

The yen, however, was notably resilient with some evidence of capital repatriation ahead of the Japanese fiscal year end. The dollar failed to generate support from a further increase in US yields and posted notable losses to around 130.60 at the European open with the Euro around 141.20.


The UK CBI retail sales index was little changed at 1 for March from 2 the previous month and slightly above consensus forecasts of –2. Retailers expect an increase in sales for April, the first reading of positive expectations since September 2022. Although expectations remain subdued, the data maintained an element of slightly greater optimism over the outlook as recession fears continued to ease

Sterling was underpinned by firmer risk conditions during the day as equities recovered ground and immediate fears surrounding the banking sector eased. The UK currency gradually advanced to highs just below 1.2300 against the dollar while the Euro retreated to the 0.8780 area.

Bank of England Governor Bailey stated that further tightening would be required if persistent inflation appears. He added that monetary policy must act to ensure that inflation from abroad does not become long lasting.  He also noted that the full effect of higher interest rates are still working through the economy.

Sterling held firm just below 1.2300 despite an element of dovishness in the remarks with markets pricing in around a 50% chance of a further rate hike in May.

BRC data recorded an increase in shop prices of 8.9% from 8.4% previously and a record high for the series, maintaining retail inflation concerns.

Sterling overall held a firm tone and traded above 1.2300 at around 1.2320 as the US currency drifted lower while the Euro was unable to regain territory.


The latest data recorded a sharp increase in Swiss sight deposits to CHF567bn from CHF515bn the previous week. This was close to the largest weekly increase on record and suggested that Credit Suisse and UBS had drawn on a liquidity facility at the National Bank.

The Swiss franc was broadly resilient during the day despite a tentative recovery in risk conditions during the day. The Euro retreated to the 0.9880 area while the dollar dipped to 0.9165. The dollar drifted below 0.9150 on Tuesday amid the wider softer US currency tone.

Technical Levels 

Tables 1 (107)

Economic Calendar

Fx Daily Calendar 28032023



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