1. FX Outlook
  2. Daily FX Report


The German IFO business confidence index dipped to a 6-month low of 87.3 for July from a revised 88.6 previously and below consensus forecasts of 88.0. The current assessment index retreated to 91.3 from 93.7 and well below forecasts of 93.0 and the expectations component retreated to 83.5 from 83.8, although this was marginally above expectations. The IFO stated that the German downturn would be extended with particularly vulnerability in the construction sector and the institute expects that the economy overall will contract in the third quarter.

According to the latest ECB survey, credit demand by companies dipped to the lowest level since the survey started in 2003. The Euro remained vulnerable after the data, but managed to resist further losses. There was, however, further selling towards the US open with a break below 1.1050 against the dollar.

There are strong expectations that the ECB will increase interest rates by a further 25 basis points on Thursday with the refi rate at 4.25%, but there is a greater element of uncertainty over potential forward guidance from the bank.

The Euro dipped to 10-day lows just below 1.1025, but resisted further selling pressure and recovered to just above 1.1050 ahead of the Fed policy announcement.

Expectations of Chinese policy stimulus continued to provide an element of support for the Euro in global markets.


The yen held relatively steady into Tuesday’s US open with the dollar unable to hold a gain to the 141.75 level against the Japanese currency. 

US consumer confidence strengthened firmly to a 2-year high of 117.00 for July from a revised 110.1 previously and comfortably above consensus forecasts of 111.8. There were significant gains for the current conditions and expectations components with the expectations index pulling well away from the 80.0 level, lessening the risk of the US economy sliding into recession. Although consumers were less confident in business conditions, there was greater confidence in the labour market.

The Philly Fed non-manufacturing index improved sharply to 1.4 for July from –16.6 previously. Sales increased, but there was a further decline in new and unfilled orders. Employment increased and there were increased inflation pressures on the month.

There are still very strong expectations that the Federal Reserve will increase interest rates by a further 25 basis points to 5.50% at Wednesday’s policy meeting. Forward guidance will be very important with markets expectations that the overall guidance will be relatively hawkish.

US yields moved higher, but the yen was resilient and the dollar was unable to make any headway with a small loss for the currency index.

Narrow ranges prevailed during Wednesday’s Asian session with a reluctance to engage in aggressive positioning ahead of Federal Reserve and Bank of Japan policy decisions. Overall, the dollar settled just below the 141.00 level against the yen after Wednesday’s European open.


The UK CBI industrial trends index improved to –9 for July from –15 previously and stronger than consensus forecasts of –17 while business sentiment did improve for the first time in two years. Cost pressures increased slightly, but there was an easing of upward pressure on selling prices.

The IMF raised its UK 2023 GDP forecast to 0.4% from the 0.3% decline expected in the April survey.

Sterling was mixed during the day with a net recovery on dips as global equities made further limited headway.

The Euro dipped further to below the 0.8600 level while the UK found support above the 1.2800 level against the dollar.

Sterling secured a further advance later in the day with a test of the 1.2900 level against the dollar while the Euro retreated further to 1-week lows near 0.8570.

Guidance from the Federal Reserve and position adjustment ahead of the ECB policy decision will be crucial for Sterling on Wednesday.


There was another reversal on Tuesday with the Swiss currency securing a fresh advance against the Euro. The single currency dipped to fresh 10-month lows below 0.9580 while the dollar was unable to hold the 0.8700 level and posted sharp losses to lows just below 0.8630. The Federal Reserve and ECB policy decisions will be watched closely over the next 2 days. The franc held firm on Wednesday with the dollar retreating further to around 0.8630.

Technical Levels 

Tables 1 (183)

Economic Calendar

Fx Daily Calendar 26072023



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