1. FX Outlook
  2. Daily FX Report


The US employment report recorded an increase in non-farm payrolls of 236,000 for March and close to market expectations while the February increase was revised higher to 326,000 from the original reading of 311,000. There was another strong increase in the number of government jobs of close to 50,000 but the increase in private payrolls was below expectations at 189,000. There were job losses in more interest rate sensitive areas such as manufacturing and construction which suggests underlying strength is fading with retail jobs also declining on the month.

According to the household survey, there was a stronger increase of 577,000 in the number of people reported as employed and the unemployment rate edged lower to 3.5% from 3.6% and slightly below expectations of 3.6% which still suggested a tight labour market.

Average hourly earnings increased 0.3% on the month which was in line with consensus forecasts with the annual increase slowing to 4.2% from 4.6% which suggested that overall wages growth was moderating slightly, but markets were still wary over underlying pressures.

Following the data, there was a net shift in expectations surrounding the Federal Reserve policy with markets pricing in just over a 70% chance that there would be a further 25 basis-point rate hike to 5.25% at the May policy meeting. There are, however, still expectations that rates will be cut before the end of 2023.

The dollar secured a net gain after the data with the Euro settling just below the 1.0900 level.

The US currency was able to make further headway on Monday with the Euro retreated to lows around 1.0830 before a limited correction.

There was a further limited hardening of Fed expectations on Tuesday, but the dollar was unable to make further headway and the Euro recovered to near 1.0900. 


The dollar posted limited gains after Friday’s US jobs data, but the advance was held below 132.50 and settled below the 132.00 level.

On Monday, new Bank of Japan Governor Ueda stated that there was no immediate need to change the joint monetary policy statement with the government. He added that the central bank wanted to avoid a sudden normalisation in monetary policy as it would cause a big impact on markets. He also stated that all policy options will be debated at every monetary policy meeting. As far as inflation is concerned, he also stated that the bank will do its upmost to achieve the inflation target while paying attention to side effects. The rhetoric overall maintained expectations that the central bank would maintain a very loose policy in the short term.

The dollar posted strong gains after Ueda’s comments with 3-week highs around 133.85 on Monday and only a limited correction.

Chinese headline inflation was below expectations at 0.7% for March which limited yuan support, but the dollar overall was unable to make further headway with the dollar drifting slightly lower to trade just below the 133.50 level with the Euro trading around 145.30.


There were no significant domestic developments, especially with UK markets closed for holidays on Friday and Monday. Overall risk conditions were less confident during the day with reservations over global monetary policy amid expectations that the Federal Reserve would raise interest rates in May.

At this stage, there are expectations that the Federal Reserve, ECB and Bank of England would all increase rates at the May policy meetings.

Sterling gradually lost ground amid the stronger dollar with a retreat to lows just below 1.2350 on Monday before a limited correction to 1.2380.

The Euro was unable to make any headway and settled with slight net losses to near 0.8770 as overall Sterling sentiment held firm.

BRC data recorded a 4.9% like-for-like annual increase in retail sales, unchanged from the previous month and slightly below consensus forecasts.

Sterling edged higher to just above 1.2400 against a slightly softer dollar on Tuesday with the Euro marginally higher at 0.8775.


The Swiss franc was unable to make any headway on Monday, especially with expectations that the Federal Reserve and ECB would both increase interest rates at the May policy meetings. There was no major impact from global risk conditions with equities little changed.

The Euro edged higher to near 0.9880 while the dollar also secured a net recovery to 0.9120 before settling around 0.9100 before a drift lower to 0.9080 on Tuesday.

Technical Levels 

Tables 1 (115)




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