1. FX Outlook
  2. Daily FX Report


The Euro remained under pressure after Thursday’s European open with fresh 3-week lows just below 1.0915 against the dollar amid a lack of Euro-Zone confidence.

The US ISM non-manufacturing index retreated to 52.7 for July from 53.9 previously and slightly below consensus forecasts of 53.0. There were also slightly slower rates of growth in business activity and new orders while order backlogs reverted to small growth on the month.

There was only a slight employment increase for the month while prices increased at a slightly faster rate.

The dollar overall lost ground after the data releases with the Euro recovering to the 1.0950 area against the dollar, although the impact was limited by the stronger rate of increase in prices on the month which could keep the Federal Reserve in a hawkish mode.

The US employment report will be released on Friday with consensus forecasts for an increase in non-farm payrolls of just above 200,000 with the unemployment rate expected to remain at 3.6% and average hourly wages increase of 0.3%.

Risk conditions were slightly more confident in Asia on Friday with the Euro settling around 1.0950 ahead of the US data.


The yen initially remained under pressure on Thursday after the Bank of Japan operation to buy bonds in the market.

US initial jobless claims increased slightly to 227,000 in the latest week from 221,000 previously and in line with market expectations while continuing claims increased to 1.70mn from 1.68mn.

Challenger data recorded a decline in layoffs to 23,700 for July from 40,700 previously and the first annual decline since May 2022.

Richmond Fed President Barkin stated that further economic slowing is almost surely on the horizon, but there was no significant commentary on monetary policy.

US yields continued to move higher after the US open, but the yen was able to regain ground as the dollar overall lost traction.

The US currency posted sharp losses to lows near 142.00 against the Japanese currency from highs near 143.90 before a recovery to 142.70.

Volatility eased on Friday with the dollar settling around 142.50 amid consolidation ahead of the US data. Markets continued to monitor Chinese policy developments, given the importance for risk conditions, but there have been no major announcements over the past 24 hours.


The Bank of England increased interest rates by 25 basis points to 5.25% at the latest policy meeting. This was the 14th successive rate hike and took rates to a 15-year high. The decision was in line consensus forecasts, although a minority had expected a 50 basis-point hike.

Haskel and Mann voted for a 50 basis-point hike to act forcefully against inflation while Dhingra again voted for no change in rates due to the risk of tightening too far.

Forward guidance was mixed with the bank stating that policy is now restrictive, but also warning over services-sector inflation with a particular focus on wages.

UK 2-year gilt yields moved lower following the decision and there was a further small decline in peak-rate expectations which also helped pull Sterling lower. 

Sterling was also hampered by weaker risk conditions as equities continued to lose ground.

The latest Bank of England survey reported that wage and price expectations had declined slightly from the previous survey.

The UK currency dipped to 1-month lows just below 1.2625 against the dollar before a recovery to above 1.2700 as UK yields rebounded from lows.

The Euro posted 1-week highs just above 0.8650 before a retreat to 0.8610.

Sterling edged higher to 1.2725 against the dollar on Friday with the Euro just above the 0.8600 level.


Swiss consumer prices declined 0.1% for July compared with expectations of a 0.2% retreat on the month, but the year-on-year rate met consensus forecasts of 1.6% from 1.7% previously. There will be relief that the inflation rate is below 2.00%, but there will be little immediate policy impact.

The Euro posted significant gains on the day with the Euro retreating to below 0.9570 while the dollar dipping to 0.8735 before a slight recovery.

Technical Levels 

Tables 1 (190)

Economic Calendar

Fx Daily Calendar 04082023



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