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

Daily FX Report

Read disclaimer



The IFO economic institute cut the 2021 German GDP growth forecast to 3.3% from 3.7% due to supply bottlenecks and increased the inflation forecast to 2.6% before moderation to 1.9% next year. Tight ranges prevailed ahead of Wednesday’s New York open with caution ahead of the Federal Reserve policy statement.

US housing starts increased to an annual rate of 1.57mn for May from 1.52mn, but below consensus forecasts of 1.63mn while building permits slowed to an annual rate of 1.68mn from 1.73mn. Import prices increased 11.3% in the year to May. The dollar held steady into the Fed statement, with the Euro consolidating around 1.2120.

The Fed held interest rates in the 0.00-0.25% range and made no change to the asset-purchase programme with both decisions unanimous and in line with consensus forecasts. According to the statement, the Fed committee remained committed to securing maximum employment and a sustained period of inflation above 2.0%. There was a more positive assessment of the outlook, and the 2021 GDP forecast was revised higher to 7.0%, but the overall commentary was relatively dovish.

There was, however, a significant shift in the forecasts of interest rates from committee members. Many members now expect the first rate hike in 2023 from 2024 previously, and seven shifted further to forecast an increase in 2022. Median projections were for two rate hikes by the end of 2023, significantly more hawkish than expected. The dollar strengthened sharply as markets focussed on the revised interest rate forecasts.

Fed Chair Powell stated that inflation could be higher and more persistent than expected. He also noted that many participants believe that the conditions for lift-off will be met earlier than expected and also noted that the US is on a path to a robust labour market. He did, however, that substantial progress is still a long way off and that policy will remain accommodative even after lift-off. Powell added that it would be extremely premature to discuss lift off at this time, but at the next meeting, the Committee will start evaluating progress. The dollar maintained a stronger tone following Powell’s comments and the Euro dipping to just below 1.2000. The US currency continued to benefit from the shift in Fed expectations, with the dollar index at 8-week highs on Thursday with the Euro below 1.2000.




Chinese industrial production growth was held to 8.8% in the year to May from 9.8% previously and slightly below consensus forecasts of 9.0%, with a more substantial miss for retail sales as annual growth slipped to 12.4% from 17.7%. Investment growth also slowed, and unemployment edged higher. The data maintained some reservations over the Chinese growth outlook, although the immediate market impact was limited.

After drifting lower into the European close, the dollar found some support below 110.00. Treasury yields moved higher following the Fed statement, with the 10-year yield strengthening to around 1.57%. In this environment, the dollar posted sharp gains to highs around 110.65. The dollar held firm ahead on Thursday ahead of the Bank of Japan policy decision on Friday, with the US 10-year yield around 1.58%. The dollar traded around 110.65, with the Euro around 132.80.




Sterling was able to post limited net gains ahead of Wednesday’s New York open. The higher than expected UK inflation data for May sparked further speculation that the Bank of England could adopt a more hawkish bias and move towards an earlier than expected policy tightening. 

There were further concerns surrounding trade relations with the EU as Brexit negotiator Frost stated that there was little headway in Northern Ireland talks. At the same time, Prime Minister Johnson warned that additional steps would have to be taken unless there was progress on the protocol.

Sterling held a firm tone but drifted towards 1.4100 ahead of the Fed statement while the Euro found support close to 0.8580.

Following the Fed statement, Sterling dipped to lows below 1.4000 against the dollar and was little changed against other major currencies. Sterling traded just below 1.4000 against the dollar on Thursday with a cautious risk appetite, while the Euro retreated to around 0.8570 amid a small shift in Bank of England expectations.




The Swiss franc weakened marginally on Wednesday, but the Euro hit selling interest above 1.0900 while the dollar was capped close to 0.9000. The dollar secured sharp gains to around 0.9080 following the Federal Reserve statement amid the shift in yield expectations.

The National Bank is expected to maintain an unchanged policy following Thursday’s quarterly meeting with the statement monitored closely for underlying policy hints, with a particular focus on intervention to restrain the franc in currency markets. The Euro held steady on Thursday, with the dollar posting net gains to 0.9090.



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?