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

Daily FX Report

Read disclaimer


The Euro-zone Sentix investor confidence index edged lower to -0.2 for February from 1.3 the previous month and below consensus forecasts of 1.9. There were still concerns over the near-term Euro-zone economic outlook, but the decline in German coronavirus cases offered some hope. Although Chancellor Merkel stated that another two weeks of falling numbers would be needed to justify an easing of restrictions, the potential for a second quarter recovery limited the potential for Euro selling.
ECB President Lagarde again called on an aggressive fiscal stimulus while underlying price pressures are likely to remain subdued.
The US employment trends index strengthened to 99.3 for January from 98.6 the previous month which had little underlying impact. There are no significant US data releases on Tuesday, although there is likely to be some speculation over Wednesday’s CPI release given the increase in inflation commentary over the past few days.
The New York Federal Reserve survey indicated that household spending growth expectations were the highest in five years which suggested that there was considerable pent-up demand which could trigger a sharp increase in spending, especially with a substantial fiscal boost and the Euro held steady.
The Euro retreated to lows at 1.2020 as the US currency gained ground, but there was fresh dollar selling in New York. Commodity currencies posted net gains and the Euro strengthened to highs around 1.2065 before fading to 1.2050. The dollar was subjected to renewed selling on Tuesday and commodity currencies also extended gains with the Euro around 1.2080 amid expectations that negative real yields would undermine the US currency.


Markets continued to monitor any rhetoric over the US dollar policy under new Treasury Secretary Yellen amid speculation that there would be an underlying preference for a weaker US currency to help underpin the economy. Trends in the bond market were also important for currency market direction and US yields edged lower during the day which limited support for the US currency. There was a dollar retreat to lows below 105.20 at the European close amid wider US currency losses.
Cleveland Fed President Mester stated that the economy is in a slow recovery, but vaccinations could lead to a strong increase in activity. The House of Representatives debated threshold limits for individual payments within the fiscal stimulus with markets expecting s strong fiscal package.
The Chinese central bank stated that it was committed to continue with interest rate reform with a prudent stance and no sudden shifts which had some positive impact on risk conditions. There was an important element of uncertainty surrounding position adjustment into the new-year Chinese market holidays starting on Thursday. Wider dollar losses dominated in Asia on Tuesday with a dip below the 105.00 level as the yen also resisted selling pressure on the crosses.


There were no significant UK data releases during the day and Sterling was unable to secure a breakout during the day. Overall risk appetite held firm during the day which provided underlying UK currency support and there was also an element of support from higher oil prices. Sterling failed to make a challenge on the 1.3750 area against the dollar early in Europe and a correction was amplified by a generally stronger US currency. There was a dip to below 1.3700 while the Euro also advanced to highs near 0.8795, although UK selling pressure was contained amid expectations of a less dovish central bank stance.
There were renewed Sterling gains later in the European session with a fresh move to 1.3750 against the dollar while the Euro retreated to 0.8760. There was an element of caution ahead of the GDP data on Friday. Before then, Bank of England Governor Bailey is due to deliver the Mansion House speech on Wednesday with markets watching whether there would be any move to inject a more dovish scenario surrounding the outlook.
BRC data recorded a 7.1% annual increase in sales for January, but Barclaycard recorded a 16.3% annual decline in spending, the weakest figure since May. Dollar weakness dominated on Tuesday with Sterling strengthening to 34-month highs around 1.3780 with the Euro around 0.8765.


Swiss sight deposits declined to CHF704.3bn in the latest week from CHF704.6bn previously which indicated that the National Bank had not been intervening to weaken the Swiss currency during the latest week as the Swiss currency tended to edge lower.
The franc overall nudged lower during the day, although the Euro hit selling interest at 1.0850 with a retreat to 1.0830 while the dollar settled around 0.8990 from 0.9020 highs. The dollar retreated further to 0.8960 on Tuesday as wider US losses dominated with the franc resisting further selling pressure.



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.