1. FX Outlook
  2. Daily FX Report


The final reading for the June Euro-Zone PMI services-sector index was revised down to 52.0 from the flash reading of 52.4 and below the May figure of 55.1 with the Spanish and Italian figures both weaker than expected. The overall composite PMI index edged below the 50.0 level. Services-sector prices increased at the slowest rate for 20 months and overall output prices increased by the smallest amount since March 2021. 

Bundesbank head Nagel stated that interest rates must increase further, although it is too early to say how far they must increase.

There was, however, also dovish ECB rhetoric during the day. Council member Visco stated that the bank could bring the inflation rate back to target by holding rates for a certain period of time rather than hiking them further. He added that he did not agree with the idea of tightening too much over too little.

There will be expectations of further dovish pressure from some of the peripheral countries and this will start to be a key feature if there is weaker than expected data and a widening of peripheral yield spreads. Weaker risk appetite also underpinned the dollar.

The Euro dipped to lows just below 1.0870 against the dollar, but sellers were unable to gain significant selling pressure and it recovered to around the 1.0900.

The dollar secured renewed support later in the session with the Euro retreating to 1.0860 ahead of the Federal Reserve minutes. The Euro was unable to regain ground after the minutes and retreated to 1.0835 on Thursday before a recovery to 1.0860 as the Chinese central bank supported the yuan.


The dollar lost ground after Wednesday’s European open and retreated to lows near 144.20 against the yen. A rebound to near 144.60 also faded quickly, but choppy trading was a key element with fresh gains into the European close.

Bond markets were a key influence with Treasuries posting sizeable losses as the 10-year yield increased to 4-week highs near 3.95%.

According to minutes from June’s Federal Reserve policy meeting, almost all participants judged it appropriate or acceptable to the leave the target rate unchanged, but some indicated that they would have supported raising rates by a further 25 basis points.

There were further concerns over inflation with almost all members stating that upside risks to inflation remained key to the policy outlook.

There was a muted reaction given that a hawkish set of minutes had been priced in, but the dollar held a firm tone, especially with almost all members expecting that interest rates will be increased again. 

New York Fed President Williams insisted that the central bank will be data dependent, but that inflation is still too high.

Elevated yields supported the dollar, but markets were wary over the threat of intervention and weaker equities also helped protect the yen with the dollar retreating to below 144.00 against the Japanese currency while the Euro retreated to near 156.00.


The final June UK PMI services-sector index was unrevised from the flash reading of 53.7 with the composite reading on hold at 52.8. Input prices increased at the slowest rate since May 2021 and there was a net slowdown in the rate of increase in services-sector charges.

There was little impact from the data with the UK 2-year yield holding above the 5.30% level. There was, however, a further shift in market pricing with markets indicating a 50% chance that Bank of England rates could be increased to 6.50%.

High yields continued to underpin the UK currency as it managed to hold just above 1.2700 against the dollar while the Euro retreated to just below 0.8550.

Sterling was resilient on Thursday despite fragile risk conditions as it held just above 1.2700 against the dollar with the Euro retreating further to around 0.8540.


The Swiss franc held steady ahead of Wednesday’s New York open with the Euro edging lower to just below 0.9760 while the dollar secured a net advance to just above 0.8980. The franc gained net support from weaker equity markets during the day, especially with reservations surrounding the global outlook.

The franc held a firm tone on Thursday with the Euro just below 0.9750 while the dollar was unable to challenge the 0.9000 level.

Technical Levels 

Tables 1 (169)




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