1. FX Outlook
  2. Daily FX Report


The French manufacturing PMI data was marginally stronger than expected, but offset by a sharper than expected slowdown in the services sector. There was the opposite position in Germany with stronger growth in services, but a sharper pace of contraction in the manufacturing sector.

The Euro-Zone PMI manufacturing index dipped to a 36-month low of 44.6 for May from 45.8 and below consensus forecasts of 46.2. The services-sector index edged lower to 55.9 to a 2-month low of from 56.2, but slightly above market expectations. New business remained subdued and there was further divergence in inflation developments. Manufacturing selling prices declined for the first time since September 2020, but there was a further sharp increase in services-sector selling prices and at a faster rate than April. Overall business optimism declined to a 5-month low. The data failed to support the Euro, especially given the steeper rate of decline in German manufacturing. The Euro retreated to lows just above 1.0760 around the US open.

The Euro attempted to rally after the New York open, but was unable to regain the 1.0800 level and lost ground again later in the session. Narrow ranges prevailed on Wednesday with the Euro managing to hold around 1.0780 ahead of the Federal Reserve minutes later in the day.


After an initial retreat, the US dollar secured renewed traction into the US open with a spike to fresh 6-month highs just below 139.00 before a quick retreat.

The US manufacturing PMI index retreated to a 3-month low of 48.5 for May from 50.2 previously and below consensus forecasts of 50.0. The services-sector index, however, advanced to a 13-month high of 55.1 from 53.6 and above expectations of 52.6. There was also divergence in orders with strong growth in services offset by a dip in manufacturing. There was a similar pattern in pricing with manufacturing input prices declining for the first time in three years while overall output prices increased at a slightly slower rate.

The Philadelphia Fed non-manufacturing index recovered slightly to –16.0 from –22.8 previously while there was a small net increase in pricing pressures.

The Richmond Fed manufacturing index retreated to –15 for May from –10 previously with a sharper slide in new orders.  There was a small retreat in the prices received index and a sharper retreat in the prices paid component. The dollar was unable to regain territory and settled just below 138.50.

Japan’s Tankan index recorded gains for manufacturing and services, increasing speculation that the Bank of Japan could adjust monetary policy relatively quickly.

The yen demonstrated some resilience with the dollar around 138.40 and the Euro around 149.30 as it demonstrated some resilience on the crosses.


The UK PMI manufacturing index declined to a 5-month low of 46.9 from 47.8 previously and below consensus forecasts of 48.0. The services-sector index also edged lower to a 2-month low of 55.1 from 55.9 and slightly below expectations of 55.5. New orders increased at a slower rate on the month while there was a marginal increase in employment. Input prices increased at the slowest rate since March 2021 while charges also increased at the slowest rate since August 2021, although price increases were still historically high. Overall business optimism declined to a 3-month low.

The latest IMF update on the UK stated that the economy will no longer face a recession this year, although the GDP growth forecast was still very tepid at 0.4%.

In testimony to the Treasury Select Committee, Bank of England Governor Bailey stated that there are risks of inflation persistence and that the bank has to respond. He did, however, add that the central bank was nearer the peak in interest rates. Markets expect a peak close to 5.00%.

Sterling overall secured a tentative net advance with the UK currency regaining 1.2400 against the dollar from 1.2375 lows while the Euro retreated to 0.8675.


There were no domestic drivers for the Swiss franc during Tuesday. The Euro was held in tight ranges against the franc on Tuesday and failed to move significantly away from the 0.9700 area amid doubts whether the ECB would be able to maintain an aggressive policy stance. The dollar hit highs at 0.9030 before settling just above the 0.9000 level. There was little change on Wednesday with the dollar trading just above 0.9000.

Technical Levels 

Tables 1 (142)

Economic Calendar

Fx Daily Calendar 24052023 (1)



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