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

Daily FX Report

Read disclaimer

EUR / USD

 

The final Euro-zone PMI services-sector index for July was revised down to 59.8 from the flash reading of 60.4 with a downward revision for the German index while both Spanish and Italian readings came in below market expectations. Euro-zone retail sales increased 1.5% for June with a 5.0% annual increase.

US ADP data recorded an increase in private-sector payrolls of 330,000 for July which was well below consensus forecasts of 695,000 while there was a downward revision to the June data to 680,000 from 692,000 previously. The dollar edged lower after the data, although the overall impact was limited given that the ADP data has had only a limited correlation with the monthly jobs report. There was also further evidence of labour and raw-material shortages curbing increases in payrolls.

The Euro posted net gains after the data and touched 1.1900, but was unable to extend the advance with renewed selling interest.

There was an important impact from Fed Vice President Clarida who stated that he expected inflation to moderately exceed 2% in 2022 and 2023. He added that he can definitely see the Fed announcing a tapering of bond purchases later this year. He also stated that he can see the conditions for an increase in interest rates could be met by the end of 2022, although he reiterated that tapering asset purchases and raising interest rates were two very different things.

The dollar secured strong support following Clarida’s comments with the Euro dipping below 1.1850 amid stronger expectations of tapering this year.

San Francisco head Daly added that her model outlook is that the central bank will be able to taper later this year or early next year which helped underpin the US currency. The dollar maintained a firm tone on Thursday with the Euro held below 1.1850 although commodity currencies were resilient in global markets.

 

JPY

 

The dollar remained on the defensive ahead of Wednesday’s New York open and dipped lower after the ADP jobs data with a retreat to lows near 108.70.

The ISM non-manufacturing index strengthened sharply to 64.1 for July from 60.1 in June and well above market expectations of 60.5. There was a notably stronger rate of increase in business activity and the new orders growth also increased at a slightly stronger rate. After an unexpected decline for June, employment increased in July while prices increased at a faster rate. The data triggered fresh expectations over a surge in US activity which propelled the dollar slightly higher.

There was only a limited response in Treasury markets to the US business confidence data, but there was a sharp initial dollar surge to 109.30. The US currency extended gains following Clarida’s comments with a move to above 109.50 amid wider US currency gains.

Activity was restrained in Asia on Thursday with the yen losing some ground on the crosses while regional equity markets were mixed. The dollar posted net gains to 109.65 even though the 10-year yield was held below 1.20% with the Euro around 129.75.

 

GBP

 

The final UK PMI services-sector index for July was revised up to 59.6 from the flash reading of 57.8. There were further important supply-side issues, especially with staff shortages while there was further upward pressure on wages. Input prices increased at the fastest rate for 25 years and charges also increased at the fastest rate on record. The Bank of England will be monitoring inflation trends closely, especially if there is evidence that higher inflation pressures are not transitory.  

Sterling held gains into the New York open as it held above the 1.3900 level against the US dollar while the Euro again tested the key 0.8500 area.

There was a retreat against the dollar with a fresh test of 1.3900, although the Euro was unable to sustain a recovery.

The Bank of England will announce its policy decision on Thursday with principal attention likely to be on the asset-purchase vote with the potential for a split on the committee. Growth and inflation forecasts will also be important for the UK currency. Sterling was unable to make headway in early Europe on Thursday as it traded below 1.3900 against the dollar while the Euro settled close to 0.8520. Markets were braced for choppy trading following the Bank of England policy decision.

 

CHF

 

The Swiss franc held a firm tone into Wednesday’s New York open with the currency resisting more than a limited correction after solid gains this week.

The Euro settled just above 1.0730 while the dollar posted a net advance to 0.9065.

Overall risk conditions remained important while the low level of yields in major currencies continued to limit the scope for franc selling. The Swiss currency was only marginally lower on Thursday with the dollar around 0.9075 as markets monitored global 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.

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 July 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. Cryptocurrencies 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.

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.