1. FX Outlook
  2. Daily FX Report


Relatively tight ranges prevailed on Friday with a lack of fresh data and major central bank developments. The Euro was unable to make any headway and retreated to lows just below 1.1110 with expectations of hawkish Fed rhetoric.

CFTC data recorded a jump in long, speculative Euro contracts to near 180,000 in the latest week from 140,000 previously and the largest long position for two months.

The Federal Reserve and ECB will both announce their policy decisions this week. There are very strong expectations that the Fed will increase interest rates by a further 25 basis points at this meeting. Markets expect that there will be no further rate hikes beyond this month, but the consensus of Fed forecasts released in June was that there would be another hike beyond July and the US central bank will be wary over adjusting guidance significantly.

There will, therefore, be important volatility after the decision, statement and press conference. 

The ECB is also expected to increase interest rates by 25 basis points with the refi rate at 4.25%. There is an important element of uncertainty over the September decision with the bank likely to insist that it will be data dependent.

The immediate focus will be on the PMI business confidence data on Monday with the relative Euro-Zone and US outlook under scrutiny. The inflation components within the data will also be important. Tight ranges prevailed in early Europe with the Euro around 1.1125.


After the European open on Friday, there were media reports quoting sources that the Bank of Japan is leaning towards leaving policy unchanged at the July policy meeting. The sources suggested that the inflation forecast for the current fiscal year would be revised higher, but with expectations that the forecasts for the following two years would be broadly unchanged. There were also reports that the bank wanted more data before making any policy changes. 

In response, the Japanese 10-year yield declined to 2-week lows and the yen declined very sharply in global markets.

The US currency surged to highs just below the 142.00 level.

Japanese currency diplomat Kanda stated that he is watching the FX market with a sense of urgency. The warning curbed yen selling to some extent with the dollar retreating to around 141.50 later in the day, but with dollar buying on dips.

Consensus forecasts are for no change at this week’s Bank of Japan policy decision, but some investment banks still expect a limited change. There was a reluctance to chase the yen weaker and the dollar traded just above 141.50 in early Europe.


Sterling was unable to make headway in Europe on Friday. The UK currency dipped to lows below 1.2820 against the dollar but managed to recover some ground later in the session as risk conditions improved with gains in equities.

Sterling edged back above 1.2850 against the dollar while the Euro settled little changed just above the 0.8650 level.

CFTC data recorded a further increase in long, non-commercial Sterling contracts to over 63,500 in the latest week from just over 58,000 the previous week and the largest long position for over 7 years. The data was collated on July 18th, just after the latest UK inflation data and there is scope for an unwinding of long positions since then. The overall positioning will be a barrier to fresh Sterling buying in the short term, especially if data releases are disappointing.

Sterling held above 1.2850 to trade around 1.2870 on Monday with the Euro just below 0.8650.


After losses on Thursday, the Swiss franc regained ground on Friday. The Euro dipped back below 0.9650 to just below 0.9625 while the dollar retreated to 0.8650.

There was some speculation that the National Bank would take advantage of any franc losses to sell overseas currencies.

The Euro was little changed on Monday with the dollar around 0.8665 as relatively narrow ranges prevailed.

Technical Levels 

Tables 1 (181)




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...