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

Daily FX Report

Read disclaimer


Euro-zone GDP declined 0.7% for the fourth quarter of 2020 compared with consensus forecasts of a 0.9% contraction with the year-on-year decline of 5.1%. The data failed to provide any Euro support, especially as data from individual countries released last week suggested that there could be a smaller dip for the quarter.
The Euro overall continued to edge lower with markets also still uneasy over the EU vaccination programme which is liable to delay any lifting of coronavirus restrictions.
The ISM New York business conditions index declined to 51.2 from 61.3 the previous month. The IBD consumer confidence index strengthened slightly to 51.9 for January from 50.1 the previous month with no significant impact from the data.
Markets overall were still more optimistic over the US outlook compared with the Euro-zone which continued to underpin the US currency, especially with the threat of aggressive short dollar positions being covered. There was also a continued shift in market dynamics with the dollar continuing to gain support despite a further net gain in risk appetite with expectations that the US would continue to attract strong capital inflows. Commodity currencies were also unable to make headway and the dollar posted fresh 7-week highs. In this environment, the Euro retreated to 2-month lows near 1.2000 against the US currency.
The US currency was unable to hold its best levels and the Euro recovered into the New York close, although Euro confidence remained fragile.
Talks to form a new Italian government failed on Tuesday, although expectations that the President would call ask former ECB President Draghi to form a national unity government underpinned sentiment. The dollar was held in tight ranges on Wednesday with the Euro trading around 1.2035.


US yields edged higher on Tuesday which helped underpin the US currency amid optimism that progress was being made on further US fiscal stimulus. Markets continued to monitor developments in Washington during the day.
The Japanese yen was able to demonstrate some resilience despite the gains in equity markets with some expectations of capital repatriation flows into Japan. There was, however, also evidence that hedge funds were continuing to cover short dollar positions against the Japanese currency. Overall, the US currency edged higher during the day with 10-week highs near 105.20, although ranges were narrow and there was a retreat to near 105.00 at the New York close.
There were indications that Democrat Senator Manchin would vote in favour of the budget plan which helped underpin risk appetite. The Senate agreed a resolution which could ensure faster progress through Congress, although there was no Republican support. Treasury Secretary Yellen stated that fresh aid is desperately needed.
China’s Caixin PMI services index slowed retreated to a 9-month low of 52.0 from 55.8 previously and well below consensus forecasts. The data maintained some reservations over the outlook and the yuan weakened amid new-year dollar demand. Risk appetite held firm and the dollar traded fractionally above 105.00.


There were no significant UK data releases during Tuesday with markets still uneasy over developments within the services sector amid coronavirus restrictions.
In this context, there was also still an element of caution ahead of Thursday’s Bank of England policy meeting with some speculation that the bank could signal that negative interest rates were a possible option. Trade friction was also a significant factor.
The UK currency was able to gain only limited further support from the strong tone in global risk appetite, although there was a significant element of resilience.
Sterling again failed to hold above 1.3700 against the dollar and gradually moved lower amid the robust US dollar tone. The Euro dipped to fresh 8-month lows below 0.8800 before attempting to recover slightly. The UK currency did secure buying support on dips and the global risk tone continued to provide underlying support. Sterling was unable to regain any momentum and settled near 1.3650 on Wednesday with the Euro around 0.8815 as global markets were watched closely.


The Euro was unable to make further headway on Tuesday as the single currency registered wider losses. The Euro eventually settled just above the 1.0800 level while the dollar strengthened to 2-month highs just below 0.9000 before correcting slightly.
Swiss National Bank member Maechler stated that the benefits of negative rates outweigh the disadvantages with the bank maintaining an expansionary policy. The franc was slightly weaker on Wednesday amid hopes of a resolution to the Italian political situation with the dollar around 0.8980 and Euro just above 1.0800.



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

Our daily commentary, covering market news and closing prices of LME aluminium, copper, lead, nickel, tin, zinc, iron ore, steel, and precious metals.

Daily Report Softs Technical Charts

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

Weekly Report FX Options

Our FX Options Report contains commentary and analysis covering OTC currency option pricing, volatility and positioning. 

Quarterly Metals Report – Q3 2022

Our analysts provide an in-depth analysis of the metals market and current macroeconomic conditions. The environment has weakened significantly as growth fears rise amid persistent high inflation. Central banks are data-dependent, which could mean they slow rate hikes as growth starts to slow. This has meant a downside to the US 10yr yield, but also we see a downside to rate hikes in Q4. Europe will likely enter a recession before the US and take longer to recover, but material availability is significantly lower, shown by low inventories.

FX Monthly Report June 2022

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we look into the JPY and the pressure the BOJ is under to change their monetary policy as JPY continues to weaken against major currencies. Economic data is weakening and inflation is less of a problem in Japan, but yields continue to test the cap.