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

Daily FX Report

Read disclaimer

EUR / USD

 

The headline Euro-zone CPI inflation rate was confirmed at 4.1% for October, although there was a slight downward revision to the core rate to 2.0% from 2.1%.

ECB Council member Schnabel stated that by continuing to buy bonds, the ECB could signal that a rate hike is not imminent.

Underlying Euro sentiment remained weak, although it secure an element of relief ahead of Wednesday’s New York open with a pause in the selling pressure and it edged back above the 1.1300 level against the dollar. There were still expectations that underlying yield spreads and the dovish Euro stance would undermine the single currency over the medium term with markets also looking to assess the extent of net capital outflows from the Euro area.

US housing starts declined marginally to an annual rate of 1.52mn from a revised 1.53mn previously and slightly below consensus forecasts while building permits increased to 1.65mn from 1.59mn which had little overall impact.  

The dollar attempted to post renewed gains after the New York open, but the Euro found further support just below the 1.1300 level with an element of short covering on the main crosses. The US currency was unable to make headway on Thursday as commodity currencies attempted to stabilise, although overall sentiment held firm. The Euro traded just above the 1.1300 level with the market reluctant to push the currency lower again without at least a limited correction.

 

JPY

 

US Treasuries were mixed in early US trading on Wednesday with the 10-year yield settling around 1.63%. Underlying dollar sentiment held firm, although there was tough resistance on approach to 115.0 against the yen which helped trigger a limited initial correction, especially with US equities drifting lower during the day.

There was a sharper correction after the European close with the dollar sliding to lows just below 114.00 as the yen also gained on the crosses.

Chicago Fed President Evans stated that he is looking for inflationary pressure to recede, but will be monitoring the situation well into the middle of 2022.

Markets remained on alert for an announcement by President Biden on whether Fed Chair Powell will be nominated for a second term or whether Brainard will be chosen instead. Sources indicated that an announcement was likely within the next few days.

Asian equities overall tended to drift lower on Thursday, although ranges were narrow with the dollar edging higher to around 114.15 and the Euro near 129.20.

 

GBP

 

Sterling continued to move higher following the latest inflation release with the higher than expected print for the October data triggering fresh unease and  reinforcing expectations that the Bank of England would sanction an interest rate hike at the December policy meeting.

Gains did, however, slow later in the day given expectations that higher rates had already been priced in to money markets.

Bank of England MPC member Mann stated that short-term inflation expectations were lagging the actual CPI rate and she was confident that people believe that the bank will bring inflation back to the 2% target. She added that goods inflation was expected to moderate during 2022 as supply difficulties ease. There were no direct comments on the outlook for near-term interest rate decisions.

Brexit Minister Frost stated that a deal with the EU over the Northern Ireland protocol could be achieved before Christmas which helped underpin sentiment to some extent, although there were still reservations over underlying tensions and yield trends tended to dominate.

The Euro remained vulnerable and retreated to fresh 20-month lows just below the 0.8400 level. The UK currency was held below 1.3500 against the dollar as the US currency maintained a firm overall tone. Sterling held just below 1.3500 against the dollar on Thursday with the Euro just below 0.8400.

Markets will continue to monitor comments from Bank of England officials in the short term while the latest retail sales data will be released on Friday.

 

CHF

 

The Swiss franc resisted further losses on Wednesday and was again resilient against major currencies. The Euro was unable to make further headway and drifted back towards the key 1.0500 level during the day while the dollar peaked around 0.9330 before edging lower again.

The Swiss franc continued to gain underlying support from expectations that inflation control would maintain currency strength over the longer term, especially given the current focus on global inflation trends. The franc maintained a strong tone on Thursday with the dollar trading below the 0.9300 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?