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

Daily FX Report

Read disclaimer

EUR / USD

 

The Euro-zone CPI inflation rate was confirmed at 1.9% with the core rate also unchanged from the flash reading at 0.9%. The Euro was unable to make any headway ahead of Friday’s New York open and continued to test the 1.1800 support area against the dollar amid expectations of a dovish ECB policy stance.

US retail sales increased 0.6% for June and were stronger than consensus forecasts of a 0.4% decline, although the May data was revised down to a decline of 1.7%. Underlying sales increased 1.3% for the month after a 0.9% decline the previous month while the control group posted a 1.1% increase on the month. There was a strong monthly increase in department store sales while auto sales declined on the month with furniture sales also declined sharply on the month.

There was a subdued initial reaction to the data with the dollar holding a firm underlying tone and the US currency gained further net support later in the session.

CFTC data recorded a decline in long Euro positions to just below 60,000 in the latest week from 77,000 previously and the lowest reading since March 2020, lessening the potential for further Euro selling. There will be further uncertainty ahead of Thursday’s ECB policy meeting and forward guidance from the bank. The Euro held fractionally above 1.1800 in early Europe on Monday but was unable to make any headway as US dollar sentiment held firm.

 

JPY

 

There was a muted response in US Treasuries from the US retail sales data with the 10-year yield held around 1.32% while equity futures edged higher. The dollar was able to post net gains to 110.25 after the Wall Street open as the yen lost wider support. The yen gained renewed support late in US trading as equities moved lower and the US dollar dipped to near 110.00 at the US close.

There should be no comments on monetary policy from Federal Reserve officials during the week with the blackout period coming into effect at the weekend ahead of the policy statement next week. This may dampen market volatility, although with the further risk of choppy trading amid lower than normal trading volumes.

CFTC data recorded a decline in short yen positions, but there is still scope for further position adjustment which could generate further yen gains. The Japanese currency maintained a firm tone on Monday, especially with risk appetite still fragile.

US equity futures lost ground on Monday and regional equity markets lost ground amid the more fragile risk conditions, although Chinese bourses were resilient.

In this environment, the yen maintained a firm tone and the dollar traded just below 110.00 with the Euro around 129.75.

 

GBP

 

Sterling attempted to move higher after the European open on Friday, although it again failed to hold the gains with the advance against the dollar held around 1.3860. The Euro was also resilient around the 0.8550 area as the UK failed to secure wider support.

There were no further comments on inflation and interest rates during the day from Bank of England officials. The UK currency continued to lose ground later in the day with a weaker tone in global equities contributing to the soft underlying tone and there was a dip below the 1.3800 level against the dollar. Comments from MPC member Haskel will be watched closely on Monday given the focus on Bank of England policy and hawkish comments from two members last week.

CFTC data recorded a sharp decline in long Sterling positions to 8,000 in the latest week from near 22,000 previously and the lowest level January this year.

Markets were uneasy over the continuing surge in new infections and potential negative impact on the economy from workers forced to self-isolate.

The housing sector data remained firm with Rightmove recording an increase in house prices of 0.7% for July with an annual increase of 5.7% from 7.5% previously.

Sterling was unable to make headway on Monday with fragile global risk conditions and delta variant concerns continuing to sap underlying support n domestic and global grounds. The UK currency traded close to 1.3750 against the dollar with the Euro strengthening to just above 0.8580.

 

CHF

 

The Swiss franc edged lower during Friday, although overall moves were limited as markets continued to focus on global developments and wider risk conditions.

The Euro edged above the 1.0850 level while the dollar hit selling interest close to the 0.9200 level.

A weaker tone in global equities helped limit potential selling pressure on the Swiss currency, especially later in the US session. The franc maintained a firm tone on Monday with the dollar continuing to trade just below the 0.9200 level as markets continued to monitor risk conditions.

 

Technical Levels

Today's Calendar

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.

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.

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 June 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. Precious metals are the focus of this month's FX Monthly report. The report includes a macroeconomic overview as well as desk comments and technical analysis on key currency pairs.