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

Daily FX Report

Read disclaimer

EUR / USD

 

The dollar was unable to make headway ahead of Tuesday’s New York open, especially given further net support for commodity currencies which eroded potential defensive US support. The Euro edged higher to around 1.1625 as commodity currencies posted net gains before stalling.

The US Case-Shiller house-price index increased 0.9% for August after a 1.5% increase the previous month with the annual increase slowing slightly to 19.7% from 20.0% and below market expectations of 20.0%.

Consumer confidence recovered to 113.8 for October from a revised 109.8 the previous month and above consensus forecasts of 108.3. There was a limited increase in the current conditions component and a larger recovery in the expectations index. Consumers were slightly more confident over labour-market trends and plans for major purchases also strengthened slightly. New home sales increased to an annual rate of 800,000 from a revised 702,000 previously and well above expectations.

The Richmond Fed manufacturing index strengthened to 12 for October from -3 in September with new orders growth also back in positive territory. Employment and wages continued to increase at a solid rate while skills shortages eased slightly and there was a slight easing of upward pressure on costs.

The Euro overall remained vulnerable during the day, especially with expectations that the ECB would push back against the increase in money-market rates with the policy decision and press conference due on Thursday. Overall, the Euro retreated back below the 1.1600 level before stabilising close to this level.

Narrow ranges prevailed on Wednesday with the Euro trapped close to 1.1600 as German consumer confidence edged higher for October.

 

JPY

 

US Treasuries dipped in early US trading with higher yields helping to underpin the US dollar while firm risk appetite undermined potential demand for the yen. The dollar advanced to highs around 114.30 before retreating slightly as yields edged lower again, but it held around 114.20 as the US currency secured wider traction.

Markets continued to monitor US fiscal developments during the day, although the overall market impact was limited and the US currency drifted lower.

Chinese industrial profits accelerated to 16.3% in the year to October from 10.1% previously which helped underpin confidence, although there were still concerns over the underlying Evergrande situation and underlying vulnerability in the real-estate sector with Chinese markets moving lower on Wednesday.

The latest Bank of Japan policy decision will be announced on Thursday with the underlying market impact likely to be limited with the central bank expected to maintain a very accommodative policy stance. The yen was resilient on the crosses with the dollar trading just above 114.00 and the Euro around 132.25.

 

GBP

 

The CBI retail sales index strengthened to 30 for October from 11 the previous month and above consensus forecasts of 14.  Retailers were more optimistic over the outlook for November sales which offered some potential relief over near-term consumer spending trends.

Firm risk conditions helped underpin the Sterling into the New York open and there was also a break above 1.3800 against the dollar. Sterling was again unable to break above 1.3830 and retreated back below this level at the European close as the dollar gained fresh support. There were also still reservations surrounding the UK recovery profile which limited the scope for aggressive buying given that a Bank of England rate hike has been priced in.

The Euro, however, retreated to 20-month lows close to 0.8400 amid wider selling pressure on the single currency and expectations that there would be further underlying yield divergence in favour of the UK currency. Risk appetite failed to hold best levels which curbed UK currency support.

Chancellor Sunak will present his budget statement on Wednesday with markets assessing the overall stance. A more expansionary than expected stance would boost expectations that the Bank of England will raise interest rates. Sterling settled around 1.3760 against the dollar on Wednesday with the Euro around 0.8425.

 

CHF

 

The Swiss franc edged lower in European trading on Tuesday as firm risk conditions undermined support. The Euro, however, was unable to hold above the 1.0700 level and retreated to 1.0665 later in the day as expectations of a dovish ECB stance undermined support. The dollar also hit selling pressure around 0.9225 and retreated to the 0.9200 area. Markets continued to monitor potential National Bank action to curb Swiss currency gains.

The franc continued to resist selling pressure on Wednesday with little change in the Euro while the dollar was held below the 0.9200 level.

 

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 November 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs, this month we focus on Turkey. Inflation continues to rise and the Central Bank cut rates, as the Fed starts to become hawkish. The report includes a macroeconomic overview as well as desk comments and technical analysis on key currency pairs.

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?