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

Daily FX Report

Read disclaimer


The Euro-zone current account surplus declined to EUR30bn for January from EUR37bn the previous month. For the 12 months to January, the surplus amounted to EUR263bn and 2.3% of GDP. The strong current account position will provide structural Euro support, especially if there is a sustained deterioration in risk conditions.
There was little evidence of contagion from a slide in the Turkish lira which helped limit fears over the impact and also curbed potential Euro selling ahead of the New York open with the single currency moving back above the 1.1900 level.
The German Bundesbank stated that the economy was likely to contract sharply for the first quarter of 2021 given that restrictions on activity are tighter than seen in the fourth quarter of 2020. There were also further concerns over near-term coronavirus trends with reports that the German lockdown would be extended until April 18th.
There were, however, reports that the German government was set to increase borrowing by EUR60bn in the supplementary budget. Expectations of a more aggressive fiscal policy provided an element of Euro support.
The US Chicago Federal Reserve national activity report dipped to -1.09 for February from a revised 0.75 previously. Existing home sales declined to an annual rate of 6.22mn from a revised 6.66mn the previous month and below consensus forecasts of 6.50mn.
The dollar overall gradually lost traction during the day with the Euro recovering towards 1.1950, although the performance for commodity currencies was unconvincing. The New Zealand dollar fell sharply on housing-sector restrictions which dragged commodity currencies lower and the Euro edged lower to 1.1925 amid a firm US dollar.


There were no significant contagion effects from the Turkish lira slide on Monday which had some impact in limiting defensive yen support. US bond yields were little changed as the 10-year rate failed to break above the 1.70% level while there were strong gains for Wall Street equities.
The dollar overall was unable to make headway and settled around 108.80 amid speculation that speculative yen selling had already reached a peak.
Fed Chair Powell and Treasury Secretary Yellen will testify to Congress on Tuesday and both released the prepared text on Monday. Yellen stated that the economy may return to full employment as soon as next year. Powell was less confident on the labour market with comments that the unemployment rate of 6.2% is an underestimate. He also reiterated that the Fed will support the economy for as long as it takes. Rhetoric on interest rates will continue to be monitored closely.
The US, Canada and EU imposed sanctions on China over the treatment of the Uyghurs in Xinjiang. The overall market reaction was measured with the yuan weakening only slightly, although markets were wary over underlying geopolitical tensions. The yen was resilient with the dollar unable to make headway and trading near 108.75.


Sterling continued to lose traction on Monday despite underlying confidence in economic recovery. The on-going row with the EU over vaccines was a significant factor undermining confidence. Prime Minister Johnson stated that he was reassured over EU intentions and that it was vital to avoid vaccine blockades, although he also commented that the third wave in the EU would reach the UK.
Sterling was also hampered by a slightly less confident tone in risk appetite and reservations over the European economic outlook, especially with the UK still facing important tensions with the EU over trade and the Northern Ireland protocol.
The UK currency dipped to lows around 1.3820 against the dollar before a recovery to 1.3860 as the US currency faded while the Euro strengthened to highs at 0.8630. The UK unemployment rate declined to 5.0% in the three months to July from 5.1%, but there was an increase of 87,000 in the claimant count.
Sterling reaction was muted with slight gains as it traded just below 1.3850 against the dollar as global developments tended to dominate with the Euro around 0.8615.


Swiss sight deposits were little changed in the latest week at CHF702.9bn, reinforcing expectations that the National Bank had not been intervening. For 2020 as a whole, intervention amounted to CHF110bn. The Swiss franc gained defensive support in early Europe as markets fretted over the implications of the Turkish lira slide.
Overall risks conditions were robust, and the Euro found support above 1.1000, but the franc held a firm tone. The Euro was held around 1.1030 while the dollar dipped to lows at 0.9225. The dollar edged higher to 0.9245 on Tuesday, although the franc held a solid overall tone.



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

Commentary and analysis covering OTC currency option pricing, volatility and positioning. This week we focus on USDSGD and whether the SDG recent strength is sustainable given the deteriorating global outlook. 

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.