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

Daily FX Report

Read disclaimer

EUR / USD

 

German factory orders increased 3.4% for July after a revised 4.6% increase for the previous month and much stronger than consensus forecasts of a 1.0% monthly decline for the month which helped underpin Euro sentiment to some extent.

The Euro-zone Sentix investor confidence index retreated to 19.6 for September from 22.2 the previous month even though the assessment of the current condition remained strong. The overall reading was very close to market expectations while the survey also indicated further evidence of a slowdown in the global economy.

The market impact was limited with narrow ranges prevailing, but the Euro tended to drift lower amid expectations that the Federal Reserve would push ahead with a tapering of asset purchases this year given that the labour market overall remains robust.

There was still an element of caution ahead of Thursday’s ECB policy meeting amid speculation that the hawkish voices would gain traction within the committee. Narrow ranges prevailed with the Euro around 1.1870 at the European close. The dollar secured a limited advance against commodity currencies in Asia on Tuesday, but the Euro held steady and traded around 1.1870 as German industrial production was close to expectations with a 1.0% increase for July.

 

JPY

 

Trading conditions were inevitably subdued on Monday given that US markets were closed for a holiday. US equity futures edged higher which limited the potential for defensive yen demand, but narrow ranges dominated markets.

Markets were waiting for further comments from Federal Reserve speakers with a particular focus on whether Friday’s jobs report has shifted their assessment of the economic outlook and potential timetable for slowing asset purchases. There will be significant comments over the remainder of the week.

Overall, the dollar settled little changed around 109.85 at the European close with slight net gains for the Euro against the Japanese currency. 

Japanese Prime Minister candidate Kishida stated that he wants a fiscal support package of JPY30trn which provided some support to yen sentiment.

The latest Chinese trade data on exports was mixed, but the import data was much stronger than expected which helped underpin confidence in Chinese demand.

Asian equities overall held firm on Tuesday and the dollar overall was held in tight ranges as it edged higher to 109.85 against the yen with the Euro around 130.35.

 

GBP

 

The UK PMI construction index declined to a 6-month low of 55.2 for August from 58.7 the previous month and below market expectations of 56.9. Growth in new orders also slowed to a 5-month low for the month with a slowdown in all main sectors for the month. The underlying demand for labour remained strong, but with evidence that a lack of skilled labour was curbing employment growth. There were further severe supply-chain disruptions that curbed activity and cost pressures remained strong with the second-highest rate of increase in input costs on record.

The data maintained some concerns that the economic recovery will falter over the next few months, especially with important supply-side difficulties, although the inflation implications will also be potentially important with Bank of England rhetoric remaining under close scrutiny.

The latest YouGov survey recorded that one-year inflation expectations were unchanged at 3.1% with long-term expectations edging higher to 3.5% from 3.4%.

The currency edged lower with some concerns over the risk of renewed Brexit tensions as the government expected to announce a further delay to some of the customs regulations on goods entering Northern Ireland. Sterling drifted to lows around 1.3830 against the dollar later in the session with a tentative net Euro gain to 0.8580.

Markets will monitor any announcement by Prime Minister Johnson on tax increases to fund social care programmes. Consumer spending evidence was mixed with a slowdown in retail sales, but strong card-spending data according to Barclaycard. Sterling consolidated just above 1.3830 against the dollar on Tuesday.

 

CHF

 

Swiss sight deposits declined slightly to CHF714.9bn in the latest week from CHF715.2bn the previous week which did not suggest that the National Bank had been intervening more actively in markets to weaken the Swiss currency.

The franc edged lower on Monday, although overall ranges were narrow. The Euro was unable to break above the 1.0880 level and consolidated around 1.0865 while the dollar secured a slight net advance to 0.9160. There was little change on Tuesday with the dollar drifting just below 0.9150.

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 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?