1. FX Outlook
  2. Daily FX Report




The Euro was held in tight ranges after Tuesday’s European open with a lack of fresh incentives and the Euro struggled to move far away from the 1.0900 level against the dollar. The Euro drifted lower late in the session amid expectations that US labour-market data this week will remain firm.

There were also reservations surrounding the Euro-Zone economic outlook, especially with markets starting to focus on the potential for higher energy prices after the summer which would undermine the economy.

The Federal Reserve will release minutes from June’s policy meeting on Wednesday where the Fed decided not to raise interest rates.

Markets will be looking for evidence on the balance of opinion within the committee and also looking for the assessment of future policy decisions. In particular, the rhetoric on inflation will be watched very closely within the text.

Markets will then be focussing on the raft of US labour-market data releases on Thursday with the ADP jobs data, jobless claims and JOLTS job-openings data.

The latest ISM services-sector report will also be important for underlying sentiment towards the US economy. Tight ranges prevailed on Wednesday with the Euro unable to make headway and the single currency drifted towards 1.0875 amid reservations over the Chinese outlook.




In electronic trading on Tuesday, US equities were little changed, but the dollar overall drifted lower against the Japanese currency and retreated to lows around 144.25 around mid-session as tight ranges prevailed.

Market activity was inevitably limited given that US markets were closed for a holiday with the dollar overall held in tight ranges.

The Chinese Caixin PMI services-sector index declined to 53.9 for June from 57.1 the previous month and weaker than consensus forecasts of 56.2. The data triggered fresh reservations over the Chinese outlook and there were also reports in state media that there was scope for further monetary easing.

The speculation over further interest rate cuts sapped support for the yuan and also helped underpin the dollar.

According to Japanese trade union confederation Rengo, the average increase in wages was the largest since 1993. Stronger wages increased speculation that the Bank of Japan would decide to tighten monetary policy which curbed yen selling to some extent.

Overall yield spreads remained negative for the yen and the dollar secured a net gain to around 144.70 with markets still wary over the Bank of Japan intervention threat, especially if the dollar breaks above the 145.00 level. 




Sterling was little changed in early trading on Tuesday, but gradually gained ground during the session even though there was no lead from equity markets. Volatility remained low across asset classes which encouraged a flow of funds into carry trades. In this context, Sterling gained an element of support as traders sold low-yield currencies. In this environment, the UK currency moved above the 1.2700 level and edged higher to a peak near 1.2740 while the Euro retreated to around 0.8565.

Although UK gilts attempted to rally slightly, the 2-year yield held around 5.28% and high yields continued to underpin the UK currency.

There were, however, still reservations surrounding the UK outlook with forthcoming high-frequency data watched very closely in the near term. Developments in the residential housing and commercial property sectors will be a particular focus over the next few weeks. 

Sterling consolidated fractionally above 1.2700 against the dollar on Wednesday with the Euro unable to make headway and settling around 0.8560.




The Swiss franc was able to make some headway during Tuesday despite low volatility and market interest in carry trades. The Euro retreated to the 0.9760 area while the dollar was unable to make headway and lost ground towards the 0.8950 area.

Global yield trends will remain important for the Swiss currency with the dollar edging higher to the 0.8975 level.

Technical Levels 

5Th July



This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

Sign up to get the latest market insights

We will email you each time a new report has been published.

You might also be interested in...