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

Daily FX Report

Read disclaimer


The German trade surplus edged higher for December, although exports were only able to secure a marginal advance on the month. The Euro held a firm tone in early Europe and challenged the 1.2100 area against the US dollar amid fresh losses for the US currency.
There was slightly greater optimism that the Euro-zone coronavirus outbreak was being brought under control which also underpinned recovery hopes.
The US NFIB small-business confidence index retreated slightly to 95.0 from 95.9 previously. The US JOLTS data recorded a slight increase to 6.65mn for December from 6.57mn the previous month, although the overall impact of data releases was very limited.
The US Consumer prices data will be watched closely on Wednesday given the increased focus on inflation expectations and the potential implications of higher reported inflation over the next few months. A stronger than expected figure could provide initial dollar support on expectations of higher US yields.
Markets continued to monitor Italian political developments with a particular focus on bond markets as the Italian 10-year yield declined to a record low of 0.50%. The decline in yields and reduction in risk premium continued to underpin the single currency to some extent.
The Euro initially failed to post further gains in New York as the US dollar attempted to stabilise, but there was solid support on dips as the dollar failed to generate any significant traction. The Euro edged higher after the European close with the US dollar continuing to lose traction and this trend continued to Wednesday. The US currency retreated to 2-week lows and the Euro strengthened to near 1.2130. Comments from Fed Chair Powell will be watched closely later in the day.


China new loans increased substantially by a record CNY3580bn for January after a CNY1260bn increase the previous month and slightly above consensus forecasts. The central bank was very anxious to provide strong liquidity support ahead of the new-year holiday period, although M2 money supply growth slowed to 9.4% from 10.1% previously. There will be the risk of a significant slowdown in credit growth after the holiday period, but the near-term provision helped underpin risk appetite.
After sharp losses overnight, the US dollar remained on the defensive during Tuesday with a sharp break back below 105.00 undermining sentiment.
US bond yields edged lower on the day and equities were held in narrow ranges which limited potential US dollar support.
Overall, the dollar continued to weaken sharply to near 104.50 and was unable to secure a significant recovery.
There is likely to be some position adjustment ahead of the Chinese New Year and the yuan retreated from 10-day highs. US equity markets moved higher in Asia, but the dollar was unable to gain support and settled fractionally above the 104.50 level with the Euro around 126.75.


The effective ban on overseas travel for leisure purposes will continue to undermine inward UK tourism revenue, but there is likely to be a be net positive impact on the UK balance of payments given that the UK traditionally runs a substantial deficit on travel income.
The UK vaccine programme also continued to give the UK currency net support, although the impact faded to some extent amid concerns over UK fundamentals.
Overall risk conditions were slightly less confident, but Wall Street equities were close to record highs and the Pound held a firm tone. Sterling strengthened to 33-month highs just below the 1.3800 level and corrections were notably limited. The Euro posted slight net gains to 0.8775 as the single currency held firm.
Comments from Bank of England Governor Bailey will be watched closely on Wednesday for further evidence on the Bank of England stance. Overall risk conditions were benign which provided underlying Pound support. The Euro was little changed at 0.8770 on Wednesday with Sterling unable to gain wider traction, although there were fresh gains to 33-month highs around 1.3820 against the dollar as the US currency remained under wider pressure.


European equity markets stalled on Tuesday which tended to curb the potential for further Swiss franc selling. The Euro was unable to gain further traction and settled only just above the 1.0800 level while the dollar retreated sharply to lows below 0.8930 after failing to hold above the 0.9000 level.
There was no significant franc impact in curbing Swiss currency demand from the decline in Italian bond yields. The franc was little changed on Wednesday with the dollar just below 0.8920 as US currency weakness continued to dominate global currency markets.



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?