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

Daily FX Report

Read disclaimer

EUR / USD

The German IFO index declined to 90.7 for November from 92.5 the previous month, although this was above consensus forecasts of 90.1. The current conditions component edged lower to 90.0 from 90.4 with a sharper retreat in expectations to 91.5 from 94.7 as fresh restrictions were introduced.

The Euro held a firm tone despite reservations over near-term conditions amid expectations of global reflation which would underpin exports.

US consumer confidence retreated to 96.1 for November from a revised 101.4 previously and below consensus forecasts of 98.0. There was little overall change in the assessment of current conditions and jobs market, but confidence in the outlook dipped sharply.

The Richmond Fed manufacturing index declined to 15 for November from 29 in October and below expectations of 20. New orders increased at a slower rate while employment continued to increase on the month. Manufacturing data has remained generally strong for the month.

The dollar overall lost ground on the day with sharp gains for commodity currencies as risk appetite secured a powerful boost during the day. The Euro was able to secure limited net gains, although there was no significant fresh challenge on the 1.1900 area.

Euro sentiment was underpinned by a confident tone from French President Macron who announced a relaxation of restrictions and stated that the second wave was over. Germany, however, registered a record increase in daily infections. The dollar remained on the defensive with the Euro again testing above 1.1900 in early Europe where resistance was again strong. Trading volumes will fade later on Wednesday ahead of the US Thanksgiving Holiday which could enhance choppy trading.

 

JPY

Risk appetite strengthened sharply during Tuesday with expectations of a strong rebound in the global economy. There were expectations of strong co-ordination of fiscal and monetary policy next year if former Fed Chair Yellen is appointed as Treasury Secretary in the new Administration.

As equity markets posted strong gains, defensive yen demand faded and the dollar was able to make limited net gains as the Japanese currency lost ground on the crosses. The dollar pushed to a high at 104.75 before fading amid the weight of wider losses.

Asian equities overall were mixed as China again under-performed with net losses, although the yuan held firm. There was still an element of optimism that a Biden administration would take a more measured stance on China which would ease potential tensions and help underpin risk appetite.

The dollar was unable to make significant headway on Wednesday and traded around 104.50 with the Euro above 124.0.

 

GBP

The CBI retail sales index edged lower to -25 for November from -23 previously, although above consensus forecasts of -35. There was some relief that the lockdown impact had been less severe than in March with sales expected to be little changed in December. Internet sales increased sharply for the month while orders fell at the slowest rate since December 2019. Overall confidence in the UK outlook remained fragile, although the England lockdown will end on December 2nd.

There was a lull in Brexit developments during the day which stifled activity to some extent. Cabinet Minister Gove stated that the EU needed to move on its red lines.

The UK currency was able to gain support from the strength in risk appetite, although it under-performed relative to commodity currencies. There was no fresh attack on 1.3400 against the dollar, although there was support just below 1.3300 while the Euro settled just below 0.8900.

The UK nations announced that there was agreement on easing coronavirus restrictions for 5 days around Christmas. Markets will be monitoring Chancellor Sunak’s spending review on Wednesday and month-end position adjustment may also have an impact with Brexit rhetoric also a key element.

Sterling was unable to make any headway on Wednesday while US President-elect Biden reiterated that the Irish border needs to remain open.

 

CHF

The Swiss franc finally lost some ground on Tuesday as the fresh surge in risk appetite triggered net losses. The extent of selling was, however, still relatively contained, especially given the scale of selling in gold over the past two days.

The Euro strengthened to highs at 1.0850 before fading to 1.0830 while the dollar was held just above 0.9120.  The Swiss currency edged lower on Wednesday as funds tended to flow into higher-risk assets, although overall selling pressure was still limited with the Euro just below 1.0850 and the dollar little changed.

 

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 December 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we focus on China, highlighting the fundamentals for the macroeconomy, as well as any changes to the PBOC in the coming months. The recent cut in the risk reserve requirement suggests monetary loosening. We also outline the movement between the onshore and offshore currency for those looking to arbitrage or hedge their exposure. This analysis gives an indication of the average width of the spread what key levels to look out for.

Quarterly Metals Report – Q4 2021

The global macro picture is starting to present some downside risks in the near term as China's economy is set to slow further and supply-chain bottlenecks continue to cap growth. New orders and new export orders in China are contractionary, and we expect demand in Q4. Order backlogs and lead times for products will continue in Q4, limiting growth, and real consumption is weaker than it looks. Higher costs from shipping, raw materials and energy will take their toll on the consumer, and we expect end-user demand to suffer. The final piece of the jigsaw is the reduction in stimulus from central banks and how that will impact financial markets, bond yields, and the dollar has rallied while stocks corrected, but what will this trend continue?