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

Daily FX Report

Read disclaimer

EUR / USD

 

The headline Euro-zone CPI inflation rate increased to 2.2% for July from 1.9% previously and above consensus forecasts of 2.0% while the core rate declined to 0.7% from 0.9% which was in line with market expectations. Unemployment declined to 7.7% for June from 8.0% and below market expectations of 7.9%.

Euro-zone GDP increased 2.0% for the second quarter of 2021, above market expectations of 1.5% and with a year-on-year increase of 13.7%.

The Euro initially held a firm tone, but it was unable to sustain a break above the 1.1900 level against the dollar and drifted lower into the New York open.

The US PCE prices index increased 0.5% for June with the year-on-year rate in line with consensus forecasts at 4.0%. The core rate increased 0.4% on the month compared with expectations of 0.6% with the year-on-year increase increasing slightly to 3.5% from 3.4% previously and below expectations of 3.7%.

Although the inflation data was slightly below expectations, the dollar edged stronger in an immediate response as underlying inflation expectations remained high.

The Chicago PMI index strengthened sharply to 73.4 for July from 66.1 the previous month and well above expectations of 64.6. There were further supply-side pressures and costs continued to increase at a rapid pace. There had been some expectations that the dollar would be sold into Friday’s London fix, but the US currency actually strengthened and the Euro dipped to near 1.1850 before stabilising. 

CFTC data recorded a further net decline in long Euro positions to below 40,000 contracts in the latest week with the long dollar position increasing to the highest level since March 2020. The positioning data will make it more difficult for the US currency to generate further buying interest.

Narrow ranges prevailed on Monday with the Euro around 1.1870 after stronger than expected German retail sales data and ahead of the latest US manufacturing data.

 

JPY

 

Japan officially announced a state of emergency for four further prefectures and there were further concerns over increasing coronavirus cases. US equities lost ground during the day while bond yields edged lower. The dollar, however, was able to resist further selling and the US currency settled around 109.70.

China’s PMI manufacturing index edged lower to 50.4 for July from 50.9 previously and slightly below consensus forecasts while the non-manufacturing index retreated marginally to 53.3 from 53.5 previously. The data maintained an element of concern over Chinese economic trends with important global implications.

CFTC data recorded an increase in short yen positions in the latest week, increasing the potential for short covering of there is a further slide in risk appetite.

China’s Caixin PMI manufacturing index declined to 50.3 in July from 51.3 the previous month with the first decline in new business for 14 months. There was a slight easing of supply-side pressures for the month and pricing pressures also moderated.

US futures and Asian equities were able to make headway on Monday with the dollar around 109.70 against the yen and the Euro just above 130.00.

 

GBP

 

There were no significant domestic developments during Friday with markets continuing to monitor risk conditions closely. The UK currency was unable to challenge 1.4000 against the dollar and there was significant selling after Wall Street open with some evidence of month-end selling.

Sterling retreated to lows near 1.3900 against the dollar while the Euro continued to find support on approach to 0.8500 and rallied to near 0.8535.

CFTC data recorded a slight net increase in short Sterling, non-commercial positions to over 5,500 contracts in the latest week, the largest short position since December 2020, potentially limiting the potential for further selling. The principal focus in the week ahead will be the Bank of England policy meeting. There is the possibility that some members on the committee will vote to curb bond-buying at this meeting even though a majority of the committee is likely to be more patient.

Sterling was unable to make headway on Monday despite gains inequities with the UK currency around 1.3900 against the dollar as UK business confidence retreated.

 

CHF

 

The Swiss KOF leading index declined to 129.8 for July from 133.3 previously and marginally below consensus forecasts of 130.0. The overall impact was limited with global trends dominating. The Swiss currency overall continued to strengthen with negative real yields in major currencies continuing to support the Swiss currency, especially with a brittle risk appetite. The Euro retreated to 6-month lows just below 1.0750 while the dollar was held near 0.9050.

The franc held a firm tone on Monday with only a marginal Euro recovery and the dollar held just above 0.9050.

 

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.

Daily Report Softs Technical Charts

Technical analysis and charts for the key sugar, cocoa and coffee contracts.

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?

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.