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

Daily FX Report

Read disclaimer



ECB President Lagarde stated on Tuesday that the bank takes concerns over rising prices very seriously and that people can trust that our commitment to price stability is unwavering. New Bundesbank head Nagel also stated that the inflation surge is not entirely due to temporary factors and that the outlook is extraordinarily uncertain.

ECB chief economist Lane, however, commented that inflation would retreat later this year and be below the central bank’s 2% target in 2023 and 2024. He added that there was no sign of core inflation speeding up in wages settlements and that a rate increase in 2022 remains very improbable.

The US NFIB small-business confidence index strengthened to 98.9 for December from 98.4 previously and slightly above expectations while there was evidence of a marginal decline in inflation pressures. The Euro drifted lower into the New York open, although it held above the 1.1300 level as underlying selling remained subdued.

Fed Chair Powell stated that the economy no longer requires an extremely accommodative policy and the central bank will return to a more normal policy with inflationary pressures likely to persist until the middle of this year. There were further expectations of a near-term rate hike in March and at least three increases in 2022.

He added that the Fed will shrink the balance sheet more quickly than last time, although he still expressed caution with comments that a reduction in the balance sheet might start this year. The comments were slightly less hawkish than had been expected following the Fed minutes released last week and the dollar lost ground. Commodity currencies posted net gains with the Euro moving above the 1.1350 level.

The latest CPI data will be released on Wednesday and the dollar may strengthen if the headline rate is above 7.0% while a weaker release would curb US support.

The dollar was unable to regain traction ahead of the data and the Euro secured a net gain to 1.1375 before stalling with commodity currencies edging higher.




Atlanta Fed President Bostic stated that there is a risk that inflation will be elevated for an extended period of time and the Fed needs to respond directly, clearly and aggressively. He added that March would be a reasonable time to start hiking rates and he expects at least rate increases this year.

Kansas City Head George stated that it will be appropriate to move earlier on shrinking the balance sheet while Cleveland President Mester commented that she would back a March rate hike to fight inflation. The dollar posted net gains into the New York open with a peak close to 115.70.

Treasuries were marginally higher following Powell’s comments and yields edged lower while equities posted limited net gains with the dollar retreating to below 115.50.

Japan’s manufacturing Tankan index retreated to 17 for January from 22 previously, but the non-manufacturing index strengthened to a 23-month high.

China’s CPI inflation rate declined to 1.5% from 2.3% and below market expectations of 1.7% which increased expectations of a central bank interest rate cut and helped underpin risk appetite. Asian equities secured a limited advance and the dollar consolidated around 115.35 with the Euro around 131.20.




Sterling pushed above the 1.3600 against the dollar in early Europe on Tuesday, but was unable to sustain the move and retreated into the New York open.

Underlying Sterling sentiment held firm on higher money-market yields and hopes that UK coronavirus cases are close to peaking. There has, however, been a strong advance since the beginning of the year and the currency struggled to gain further traction with higher yields seen as priced in.

The on-going difficulties surrounding Prime Minister Johnson had only a limited impact, but political developments will be watched closely amid frenetic speculation.

There was a fresh push to above 1.3600 as the dollar retreated while the Euro was little changed close to 0.8340.

Global risk appetite held steady on Wednesday which helped underpin Sterling and overall currency sentiment held firm. The UK currency advanced to fresh 2-month highs near 1.3650 against the dollar before stabilising while the Euro traded below the 0.8350 level.




The Swiss franc initially remained on the defensive during Tuesday, but it was able to resist further selling pressure with the Euro hitting resistance above the 1.0500 level while the dollar was unable to make further headway and retreated to around 0.9240.

The Swiss currency was still hampered by underlying yield trends and expectations that global central banks will raise interest rates this year. The Euro held close to 1.0500 on Wednesday with the dollar around 0.9235 as overall risk appetite held steady with markets monitoring yield trends closely.


Technical Levels

Today's Calendar



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.

Weekly Report FX Options

Commentary and analysis covering OTC currency option pricing, volatility and positioning.

Daily Report Softs Technical Charts

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

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?