1. Reports
  2. Daily FX Report
Non-independent Research

Daily FX Report

Read disclaimer

EUR / USD

Headline US retail sales increased by 7.5% for June compared with consensus forecasts of a 5.0% increase and followed an upwardly-revised 18.2% increase for May. Underlying sales increased 7.3% on the month and the control group registered a 5.6% advance after a 10.1% gain the previous month.

The Philadelphia Fed manufacturing index retreated slightly to 24.1 for July from 27.5 previously but was above consensus forecasts of 20.0. There was a stronger increase in new orders, although only a small increase in unfilled orders while employment increased. Initial jobless claims declined slightly to 1.30mn for the latest week from 1.31mn previously, although slightly above consensus forecasts of 1.25mn. Continuing claims declined to 17.3mn with overall claims, including Federal benefits, declining to 32.0mn from 32.4mn previously. The data overall was stronger than expected, but markets remained uneasy over the risk that recovery would stall given the fresh increase in coronavirus cases, especially as transportation indices indicated very little recovery and mobility indices have lost ground.

The ECB held interest rates unchanged at the latest policy meeting with the main refi rate remaining at 0.0%. Bank President Lagarde stated that the economy had shown signs of a significant though patchy and uneven recovery while the risks were still tilted to the downside and uncertainty over the rebound also remained high.

Overall she expressed confidence in the bank’s emergency programmes which were working. Looking at PEPP emergency bond purchases, Lagarde expected that the full envelope of EUR1350bn would be used unless there are significant upside surprises to the baseline scenario. There are differences of opinion on the council with two members indicating that full provision may not be needed. The Euro overall secured net gains to the 1.1430 area at the European close. An EU official stated that there are still important differences over the recovery find an agreement is not there yet while Lagarde stated that an ambitious and co-ordinated fiscal response remains critical. The Euro retreated to near 1.1380 as the dollar recovered some ground with markets watching the EU Summit very closely on Friday and Saturday.     

JPY

The US dollar was able to gain some support following the latest data releases and moved back above the 107.00 level. Overall moves were, however, limited as US bond yields moved lower despite the upbeat data releases. New York Fed President Williams stated that the economy is facing more deflationary than inflationary pressure and this is not the time for the central bank to consider exit strategies. The number of new coronavirus cases in Florida increased to over 13,800 and the number of deaths increased to a fresh record, although the overall death rate remained lower than in the New York outbreak. The increase in national cases pushed to a record high of over 70,000, reinforcing concerns. Texas governor Abbot stated that there would be no shutdown in the state despite the surge in cases.

There were further concerns over US-China diplomatic tensions, especially with the US Administration threatening to block US access for Communist Party members. China, however, indicated further policy stimulus was likely which helped protect risk conditions with regional markets mixed and a weaker offshore yuan. US equity futures edged higher on Friday, but there is likely to be caution ahead of the weekend and the dollar consolidated around 107.20.

GBP

The UK labour-market data caused an element of initial confusion with headline data stronger than expected, but the underlying data caused significant concern with declines in payrolls and hours for June. With further announcements of job losses, there were concerns that underlying unemployment would continue to increase and trigger a sharp rise in headline unemployment later in 2020. There were also expectations that the Bank of England would have to ease monetary policy further.

Sterling moved lower following the data but gradually regained some ground later in the day. The currency was supported by expectations of very accommodative monetary policies from the Federal Reserve and ECB. The UK currency edged above 1.2600 against the dollar, but equity markets were lower and unease over brittle risk conditions limited support with the UK currency retreating to near 1.2550 while the Euro settled around 0.9065 on Friday. 

CHF

The Swiss franc was held in relatively tight ranges during Thursday as markets assess underlying risk developments. The Euro was unable to move above 1.0800 and settled around 1.0770 while the dollar registered slight net losses.

The franc is liable to lose ground if the EU can find agreement on the recovery fund at the Summit meeting while failure to secure agreement would provide some net franc support. The Euro edged lower on Friday with the dollar just below 0.9450 and there will be the potential for significant moves at the Monday open.

Contents

Disclaimer

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 Non-independent research

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

You might also be interested in...

Daily Report Base Metals

Daily market commentary on LME aluminium, copper, lead, nickel, tin and zinc.

Daily Report Softs Technical Charts

Technical analysis and charts for the key sugar, cocoa and coffee contracts.

Weekly Report FX Options

Commentary and analysis covering OTC currency option pricing, volatility and positioning.

FX Monthly Report July 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. Cryptocurrencies are the focus of this month's FX Monthly report. The report includes a macroeconomic overview as well as desk comments and technical analysis on key currency pairs.

Quarterly Metals Report – Q3 2021

COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.