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

Daily FX Report

Read disclaimer


There was dovish rhetoric from ECB officials during Friday which undermined the Euro. Council member Schnabel stated that the central bank may need to add support if the rise in yields hurts growth. Fellow member Stournaras commented that the central bank should accelerate the rate of PEPP bond purchases. Visco stated that extreme prudence must be used before exiting support measures, although he also acknowledged that inflation expectations were on the rise.

The Euro overall weakened into the New York open, especially with fragile risk conditions and the Euro dipped towards the 1.2100 area against the dollar.

US personal income increased sharply by 10.0% for January as the stimulus measures and an increase in benefits boosted incomes. Spending increased 2.4% for the month following a 0.4% decline the previous month and in line with market expectations.

The core PCE prices index increased 0.3% for January for the second successive month with the year-on-year rate edging higher to 1.5% from 1.4%.

The Chicago PMI index retreated to 59.5 for February from 63.8 previously and slightly below forecasts of 61.0. There was a significant slowdown in new orders growth to the weakest level since August 2020 with some supply constraints in evidence.

The Euro rallied after the Wall Street open before fading again to trade near 1.2075 as a sharp dip in risk appetite boosted the US dollar and triggered a slide in commodity currencies. There was only a marginal decline in long Euro positions for the latest week, maintaining the risk of position adjustment, but risk appetite recovered in Asia on Monday which curbed near-term dollar demand and the Euro recovered slightly to the 1.2085 area amid a bounce in commodity currencies.


US bond yields retreated slightly on Friday, although there was still solid support for the US currency as changes in bond yields continued to have an important impact. There was also yen selling into the London fix amid position adjustment with dollar highs near 106.70 before a correction to 106.55 as Wall Street indices dipped again.

Over the weekend, the House of Representatives passed the $1.9trn fiscal stimulus Bill with the legislation now passing to the Senate with a recovery in risk appetite.

China’s PMI manufacturing index edged lower to 50.6 for February from 51.3 and below consensus forecasts while the non-manufacturing index retreated to 51.4 from 52.4. Employment and exports orders were both in contraction territory. The Caixin PMI index also edged lower to 50.9 from 51.5 previously.

Wall Street futures recovered on Monday which underpinned risk conditions and the dollar touched 6-month high near 106.70 before fading slightly to trade around 106.55 against the yen as bond yields edges lower with markets still wary over a fresh retreat in equity markets amid higher volatility.


Bank of England chief economist Haldane stated that there is a risk that central bank complacency could allow the inflation cat out of the bag and that there might be a more sustained rise in inflation than expected. There were, however, also deflationary forces and his main point was that the cost of getting judgements wrong could be significant. Deputy Governor Ramsden stated that rising yields reflect good news on the economy and that market moves are reflation moves rather than inflation moves. He added that there will be a high bar to unwinding UK monetary easing.

Sterling was undermined by more fragile risk conditions with the UK currency dipping below 1.2900 against the dollar before a recovery. The Euro strengthened to highs at 0.8730 before a retreat to 0.8660 with Sterling still securing underlying support amid optimism over the vaccine programme.

CFTC data recorded an increase in long, non-commercial Sterling positions to 31,000 contracts in the latest week from 22,000 previously and the highest figure for close to 12 months. This extent of long positioning has often been followed by a sharp decline in the spot rate which will make traders nervous.

Firmer risk conditions underpinned Sterling on Monday as it recovered to near 1.4000 against the dollar with the Euro edging lower to 0.8640.


Swiss GDP increased 0.3% for the fourth quarter of 2020 after a 7.6% gain the previous quarter with a year-on-year decline of 1.6% from 1.4% previously. The KOF business confidence index strengthened to 102.7 for February from 96.5 previously and above consensus forecasts.

Risk trends dominated on Friday and the Euro registered net losses with a decline to below the 1.1000 level while the dollar hit resistance close to the 0.9100 level. Risk appetite recovered on Monday which curbed immediate demand for the Swiss franc with the Euro around 1.0980 and the dollar just above 0.9080.



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?