1. FX Outlook
  2. Daily FX Report


German unemployment increased 16,000 for March compared with expectations of a 2,000 increase with the unemployment rate edging higher to 5.6% from 5.5%.

The Euro was unable to make headway after the European open and tended to drift lower.

The headline Euro-Zone consumer inflation declined sharply to 6.9% for March from 8.5% the previous year and below consensus forecasts of 7.1%. The headline rate was cut by a decline in energy prices and there was also a very favourable base effect as energy prices surged last year.

The underlying inflation rate edged higher to 5.7% from 5.6% and in line with market expectations. There were expectations that the ECB would adopt a hawkish policy stance given concerns over core inflation pressures.

The Euro briefly posted gains on the core data but was unable to hold above the 1.0900 level against the US currency and there was no sustained support.

Although the US data was slightly lower than expected, the dollar resisted fresh selling pressure. The Euro settled around 1.0860 at the European close.

The dollar posted sharp gains after Monday’s Asian open with the main focus on a surge in oil prices after OPEC announced an unexpected cut in oil output. The jump in oil prices increased fears over a fresh increase in inflation pressures which could force the Fed to be more aggressive in raising interest rates.

Higher oil prices also undermined the Euro amid concerns over the growth outlook and it dipped to below 1.0800 below the dollar before stabilising.


The dollar posted further gains ahead of the New York open with the US currency advancing to highs around 133.50 against the US dollar.

The US PCE prices index increased 0.3% for February with the year-on-year rate declining to 5.0% from 5.3% and slightly below expectations of 5.1%.

Core prices also increased 0.3% on the month with the annual rate marginally lower at 4.6% from 4.7% and slightly below expectations of 4.7%.

The Chicago March PMI index edged higher to 43.8 from 43.6 and fractionally above expectations, but this was still the seventh successive reading below 50.0.

Treasuries overall were little changed after the data with the 10-year yield just above 3.50%. The dollar overall was unable to make further headway and dipped to around 132.75 amid month-end position adjustment. The yen was also broadly resilient despite a fresh surge in equities.

New York Fed President Williams reiterated that data will drive monetary policy, although he added that bank stresses will lower consumer spending.

Fed Governor Collins stated that maintaining a tight monetary policy is key to lowering inflation and added that a weaker jobs report in March is unlikely to change the policy outlook. Fed Funds futures indicated just below a 50% chance of a further rate hike at the May meeting.

Japan’s Tankan business confidence index recorded the lowest manufacturing figure since December 2020 while the services index posted a 3-year high.

The yen was undermined by a surge in oil prices and the dollar strengthened to above 133.50.


The latest round of UK data releases provided an element of Sterling support with relief that the UK had avoided a technical recession for the second half of 2022. The current account deficit also narrowed slightly, although the overall impact was limited.

Sterling continued to gain net support from gains in equities and solid global risk conditions. There was, however, also pressure for a correction after failing to break resistance levels towards 1.3450 against the US currency. A dip back below 1.3400 also sapped underlying confidence.

Overall, Sterling retreated steadily to lows below 1.3350 against the US currency with the Euro edging lower to around 0.8795 as tight ranges prevailed.

Risk conditions were less confident on Monday as markets focussed on the surge in oil prices and Sterling retreated further to around 1.2280 against the dollar.


The Swiss franc was able to resist selling pressure on Friday and secured net gains despite solid risk conditions. There was an element of position adjustment which helped underpin the currency. The Euro retreated to the 0.9930 area with the dollar unable to hold gains and consolidating around 0.9140.

Higher oil prices increased expectations that the National Bank would have to be more aggressive in raising interest rates which provided an element of franc support, although the dollar overall secured a net recovery to around 0.9185 on wider gains.

Technical Levels 

Tables 1 (111)

Economic Calendar

Fx Daily Calendar 03042023



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