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

Daily FX Report

Read disclaimer

EUR / USD

 

The German ZEW economic expectations index declined to 63.3 for July from 79.8 previously and below consensus forecasts of 75.2. The current conditions component, however, strengthened to 21.9 from -0.1 the previous month and above market expectations of 5.0. The Euro-zone expectations index retreated to 61.2 from 81.3 previously and the data overall sapped confidence in the outlook with a retreat in equities.

Euro-zone retail sales increased 4.6% in May with a 9.0% annual increase. After a firm tone in Asia, the Euro was unable to make further headway and there was a sharp reversal soon after the European open with a rapid retreat towards the 1.1850 area as the dollar secured fresh support.

The US PMI services-sector index was revised marginally lower to 64.6 for the final June reading from 64.8 previously.

The ISM non-manufacturing index declined to 60.1 for June from 64.0 previously and below consensus forecasts of 63.4. There was a notable slowdown in the rate of growth in new orders and business activity growth also slowed. The employment component dipped into contraction territory for the month after five successive increases which triggered unease, while the rate of price increases slowed marginally from the previous month, although remained close to record highs.

The dollar maintained a firm tone after the data with a weaker tone surrounding risk conditions while commodity currencies also reversed sharply. As selling in commodity currencies gathered pace, the US currency secured further gains with the Euro retreating to near 1.1800 and close to 3-month lows. German industrial production declined 0.3% for May which provided some relief after the slide in orders. The dollar maintained a firm tone in Europe, but the Euro edged higher to 1.1825.

 

JPY

 

The dollar was unable to make any headway ahead of the New York open on Tuesday and was held below 111.00 against the yen. Treasuries posted significant gains following the US data releases with the 10-year yield dipping to 2-week lows around 1.37%. Lower yields undermined the dollar and there was a significant retreat in equity markets which provided an element of yen support. In this environment, the dollar retreated to lows near 110.50 against the Japanese currency. There was an element of stabilisation in equities later in New York, but the dollar secured only limited respite. Markets will monitor the Federal Reserve minutes closely on Wednesday for further evidence on potential Fed tightening plans with commentary on conditions for a tapering of bond purchases watched closely.

China’s economic daily issued an opinion piece warning markets not to bet on further yuan depreciation which suggests some unease within the authorities over currency trends. Treasuries secured further gains with the 10-year yield at fresh 4-month lows which sapped US currency support and the dollar dipped to 110.40 before stabilising around 110.60 while the Euro weakened to near 130.50 before recovering with underlying risk conditions remaining under close scrutiny.

 

GBP

 

The UK PMI construction index strengthened to 66.3 for June from 64.2 in May which was above consensus forecasts of 63.8 and the strongest reading for 24 years. There was further growth in new orders, but the main feature was further supply-side difficulties with delivery times lengthening by a record amount on the month. Employment increased at a strong rate for the month while prices paid increased at the fastest rate on record which reinforced underlying inflation concerns.

Sterling was unable to break above the 1.3900 level against the dollar following the UK data and there was a sharp reversal ahead of the New York open.

Sterling support was undermined by the weaker tone surrounding risk appetite, especially with UK equities moving lower during the day.

The UK government announced that there would be a further easing of restriction in August with attempts to boost employment levels by reducing the number of people needing to self-isolate. Markets were wary over the risk posed by a further increase in infection rates. Overall, Sterling retreated sharply to lows near 1.3775 against the dollar while the Euro found support below 0.8550. Sterling stabilised just above 1.3800 against the dollar on Wednesday with the Euro around 0.8565.

 

CHF

 

The Swiss currency was initially resilient on Tuesday and gradually gained ground as risk appetite deteriorated and equity markets came under some pressure. The decline in US and Euro-zone bond yields also provided net support for the franc while the yen maintained a firm tone.

The Euro retreated to near 1.0930 against the Swiss currency while the dollar posted net gains to near 0.9250. Risk conditions remained under scrutiny on Wednesday with the franc posting limited net gains and markets will be wary over the threat of potential franc sales by the National Bank.

 

Technical Levels

Today's Events

Contents

Disclaimer

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 September 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. The report includes a macroeconomic overview as well as desk comments and technical analysis on key currency pairs.

Quarterly Metals Report – Q3 2021

COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.