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

Daily FX Report

Read disclaimer

EUR / USD

The German ZEW economic sentiment index declined to 39.0 for November from 56.1 the previous month and below consensus forecasts of 41.8 while the current conditions index edged weaker to -64.5 from -59.5 in October. The wider Euro-zone sentiment index dipped to 32.8 for November from 52.3 the previous month.
The Euro was unable to make any impression and dipped to lows below 1.1780 amid short-term unease over Euro-zone developments.
The US NFIB small-business confidence index was unchanged at 104.0 for October and above consensus forecasts of 102.2.
The JOLTS recorded a small increase in job-openings to 6.44mn from 6.35mn the previous month, but slightly below consensus forecasts. Elsewhere, the IBD consumer confidence index declined to 50.0 for November from 55.2 previously. Data had little impact given the focus on coronavirus developments.
After the New York open, the European Parliament and EU governments reached a deal on the 2021-2027 budgets which included the EUR750bn recovery package. The agreement boosted confidence in the Euro-zone 2021 recovery outlook which also cushioned the Euro.
Boston Fed Governor Rosengren stated that more fiscal and monetary stimulus is appropriate and that it was crucial to provide support for small companies.
US yields edged lower after the Wall Street open which also limited fresh dollar support, although there was a limited correction in commodity currencies which helped protect the US currency. Overall, the single currency recovered some ground following the EU budget approval, although there was a lack of momentum and overall yield spreads were still a significant element supporting the dollar. The Euro settled around 1.1825 in early Europe on Wednesday as commodity currencies advanced.

JPY

Global risk appetite held firm on Tuesday which limited the potential for yen support. US yields, however, moved slightly lower which limited the potential for further sustained US currency support and overall market volatility eased as traders considered the potential vaccine implications.
Markets continued to monitor US political developments as President Trump’s legal team continued to challenge the results in a few battleground states. Markets will monitor speculation surrounding Biden’s key appointments with a particular focus on the Treasury Secretary given the global implications.
Although there was further optimism surrounding medium-term vaccine developments, there were important concerns over the near-term outlook. US hospital admissions have surpassed their April peak and several states were looking to impose fresh restrictions on activity. US equity markets were unable to make headway, although future edged higher on Wednesday while the Chinese yuan held firm. Overall, the dollar edged higher to near 105.30 in early Europe.

GBP

The UK jobs data reinforced unease over labour-market trends, especially a sharp increase in redundancies. An extension of the furlough scheme provided an element of relief and Sterling was also protected by optimism that vaccine developments would help provide a key lifeline for the economy.
Bank of England Chief Economist Haldane stated that a vaccine could be transformational and also pointed out that there was no point in providing extremely strong policy support if communication stokes fearfulness. Vaccine hopes dampened talks of potential negative interest rates.
There were no substantive developments on Brexit trade talks during the day with markets optimistic that progress towards a deal would be made this week.
Global risk appetite held firm which helped protect the UK currency, especially with hopes that vaccine developments wold provide important relief to the services sector next year. Sterling strengthened to 9-week highs above 1.3250 against the dollar and the Euro retreated to 2-month lows below the 0.8900 level before a correction.
The latest UK GDP data will be released on Thursday with the potential for a strong rebound in the third quarter offset by underlying concerns over the fourth-quarter relapse. Sterling held firm on Wednesday with robust risk appetite still an important element in providing support as it traded near 1.3270 against the dollar.

CHF

The Swiss franc edged lower on Tuesday as the robust tone in global risk appetite helped limited demand for the Swiss currency, especially with an increased element of optimism over the 2021 global recovery outlook. The EU recovery fund approval also dampened support for the franc.
The Euro edged above the 1.0800 level, although overall gains were still limited while the dollar advanced to the 0.9175 area before settling around 0.9150. Precious metals stabilised which limited the potential for franc selling with the Euro just above 1.0800 on Wednesday while the dollar was held just below 0.9150.

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 September 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. 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.