1. FX Outlook
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ECB council member Kazaks stated that the May policy decision was between a 25 and 50 basis-point rate hike and the Euro held below 1.1000 against the dollar

The US New York Empire manufacturing index recovered very strongly to 10.8 for April from –24.6 the previous month. The release was well above consensus forecasts of –18.0 and the first positive reading for 5 months. There was a surge in new orders for the month with production also posting strong growth, although unfilled orders were unchanged. Employment continued to decline on the month and the workweek also declined. There was a net easing of cost pressure, but prices received increased at a slightly faster rate. Companies were only slightly more optimistic over the outlook while inflation pressures are expected to increase slightly.

The data reinforced expectations that the Fed would increase interest rates again at the May policy meeting and the dollar posted further gains after the release.

The Euro dipped to lows close to 1.0910 towards the European close as the dollar held gains.

ECB President Lagarde stated that changing the 2% inflation goal can be discussed once the current objective is achieved which created some uncertainty.

Stronger than expected Chinese data provided limited Euro support and it traded around 1.0935 in early Europe on Tuesday.


The US NAHB housing index edged higher to 45 for April from 44 the previous month and in line with consensus forecasts. There was little impact from the NAHB data, but Treasuries posted sharp losses after the New York manufacturing data with yields moving sharply higher as the 10-year yield approached 3.60%.

Higher yields were significant in undermining the yen and the dollar posted strong gains to highs just above 134.50.

Richmond Fed President Barkin stated that he wants further evidence that inflation is settling back to target.

The 2-year yield pushed to highs to 3-week highs above 4.20%, which limited any dollar retracement.

Chinese GDP increased 4.5% in the year to the first quarter after 2.9% previously and above consensus forecasts of 4.0%. There was also much stronger than expected growth in retail sales of 10.6% compared with expectations of 7.3%. Unemployment declined to 5.3%, although the industrial production data was slightly weaker than expected. The data overall helped underpin confidence in the Chinese and global outlook.

There were reports that the Bank of Japan will set the 2025 GDP forecast below the 2.0% target, maintaining expectations of a dovish Bank of Japan policy. The dollar posted highs at 134.70 in Asia before a limited correction to just below 134.50 as US yield trends remained a key element.


Bank of England deputy Governor Cunliffe concentrated his comments on the cryptocurrency regulatory framework and there was no rhetoric on monetary policy with markets expecting at least one more rate hike. Overall risk appetite held relatively steady during the day with limited net gains for UK equities.

Sterling lost ground against the stronger dollar with a retreat to the 1.2360 area while the Euro reversed gains seen on Friday with a retreat to 0.8830.

The UK labour-market data recorded a slight increase in unemployment, but there was a stronger than expected employment increase. Importantly, headline annual wages growth held at 5.9% compared with expectations of a decline to 5.1%. The data maintained market expectations that the Bank of England would increase interest rates again in May and Sterling advanced to near 1.2400 against the dollar with the Euro around 0.8820. The latest inflation data will be released on Wednesday with consensus forecasts for a decline in the headline rate to 9.8% from 10.4% previously. The core rate is forecasts to decline to 6.0% from 6.2%.


Total Swiss sight deposits increased to CHF544.1bn in the latest week from CHF532.2bn the previous week. After a sharp decline the previous week, the fresh increase in deposits will maintain concerns that there could be renewed liquidity pressures in the banking sector.  

The Euro was unable to make any impression on the franc and settled just above the 0.9800 level while the dollar secured a further net recovery to near 0.9000.

The franc held steady on Tuesday with little net change in equities and the dollar edged back to 0.8980.

Technical Levels 

Tables 1 (120)

Economic Calendar

Fx Daily Calendar 18042023



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