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

Daily FX Report

Read disclaimer


German retail sales declined 4.4% for April following the sharp 7.7% increase the previous month with the year-on-year increase held at 4.4%. The Euro was unable to make headway in early Europe on Wednesday, especially with some expectations that the ECB would maintain a dovish stance at next week’s policy meeting and push back against any paring of asset purchases. Bank President Lagarde stated that it remained committed to preserving favourable financing conditions.
The dollar continued to gain some respite with the Euro retreating to lows at 1.2165. The US currency was underpinned by speculation that the Federal Reserve could eventually shift towards a less aggressive policy. Near-term dollar liquidity, however, remains extremely high, especially with the Treasury drawing down the cash balance. The very high level of liquidity will tend to undermine the US currency in the short term, especially while yields remain very low. Overall, the dollar was unable to hold its best levels and the Euro recovered to above 1.2200 at the European close.
The Federal Reserve Beige book reported that the economy had grown somewhat faster than in the previous period and that overall price pressures had increased. Production costs had increased rapidly with gradual increases in selling prices amid further supply-chain difficulties. There were also expectations that prices would continue to increase over the next few months. The report maintained concerns over inflation developments, but the dollar struggled to gain more than marginal relief. The Euro settled close to 1.2200 on Thursday with the focus firmly on the jobs data with ADP data on Thursday ahead of Friday’s payrolls report.


The US dollar maintained a firm tone into Wednesday’s New York Open, but it was unable to challenge the 110.00 level against the Japanese currency. There were no major data releases and Treasury yields were little change which stifled further potential US currency support.
Philadelphia Fed President Harker stated that inflation was likely to be close to 3% in 2021 with GDP growth around 7% before moderation next year. Although he expects the FOMC to keep the Fed Funds rate at a very low level for a long time he added that it may be time to at least think about thinking about tapering bond purchases. The Fed did announce that it was winding down the corporate bond-buying programme, which sparked some further speculation over a wider move towards slowing bond purchases, although the corporate buying was a very small part of the overall asset-purchase programme.
The dollar was unable to gain significant support from the Fed rhetoric and drifted towards the 109.50 level against the yen as both currencies struggled for support.
Japan’s PMI services index was confirmed in contraction for May for the 16th successive month as underlying confidence in the economic outlook and yen remained weak. Overall, the dollar edged higher to around 109.75 in early Europe with the Euro around 133.85 as yen sentiment remained fragile.


There was a sharp slowdown in UK mortgage lending for April with a decline to £3.3bn from the record £11.5bn for March, although the number of mortgage approvals increased slightly to near 87,000 from 83,400 previously. There was a further net repayment of £0.4bn for consumer credit while corporates also repaid borrowings. There were sharp distortions with a surge in mortgage borrowing for March followed by a sharp dip in April as the higher thresholds were extended to the end of June.
There was further speculation that underlying strength in the housing market would lead to a more aggressive Bank of England monetary policy within the next few months. Global risk appetite was also firm which helped underpin the UK currency despite underlying caution.
From lows near 1.4110 against the US dollar, Sterling recovered strongly to around 1.4180 at the European close while the Euro found support close to 0.8600.
Prime Minister Johnson reiterated that there was nothing in the data which indicated that the planned June 21st easing of restrictions wouldn’t go ahead which helped underpin sentiment, although there were still calls for a delay. Sterling settled near 1.4150 against the dollar on Thursday with the Euro around 0.8615.


The franc tended to lose ground on Thursday, although there was a significant recovery from intra-day lows. Markets continued to monitor global inflation developments closely given the potential importance for central bank policies and wider asset-price trends.
The Euro found support close to 1.0950, but failed to challenge 1.1000 and settled around 1.0970. The dollar was again unable to hold above the 0.9000 level. The franc was little changed on Thursday with the dollar around 0.8990 as markets continued to monitor central bank rhetoric.


 Technical Levels 







Today's Events 



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?