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

Daily FX Report

Read disclaimer



Narrow ranges prevailed ahead of Wednesday’s New York open with the Euro drifting lower amid Ukraine concerns and an underlying lack of yield support.

The US goods trade deficit widened to $101.0bn for December from $98.0bn the previous month and above consensus forecasts of $96.1bn. The growth in imports out-paced exports again and the 2021 deficit hit a record high of $1.08trn from $894bn the previous year.

Trading ranges remained narrow with the Euro settling around 1.1280 at the European close.

The Federal Reserve made no changes to interest rates with the Fed Funds rate held at 0.25%. The statement noted that the economy had continued to improve, but that the path of the economy continues to depend on the virus and risks to the outlook remain. It added that with inflation well above 2.0% and a strong labour market it would soon be appropriate to raise interest rates. The Fed will conclude asset buying by the beginning of March which reinforced expectations that there would be a rate hike at the March meeting. The dollar edged lower in an immediate reaction, although moves were limited.

Chair Powell reiterated that the economy no longer needed on-going high levels of monetary support given inflation and employment developments.  Powell added that there was plenty of room to raise interest rates given the strength of the labour market and he did not rule out raising rates at every meeting. He added that it was possible that the Fed could move faster than the previous tightening cycle and his rhetoric overall was notably and consistently hawkish.

Powell also warned that inflation was liable to be higher than expected and the overall tone triggered significant dollar gains as markets priced in a series of rate hikes. The Euro retreated to below 1.1250 and posted further losses on Monday with 2-month lows near 1.1210 and close to 19-month lows as the dollar advanced.




There was little change in US Treasuries ahead of the New York open, but equities maintained a firmer tone during European trading which limited potential support for the Japanese currency and the dollar was able to post net gains to the 114.30 area.

Fed Chair Powell commented that there had been no decision on the timing or speed of balance-sheet reduction which maintained underlying uncertainty.

US Treasuries dipped sharply following Powell’s hawkish comments with the 10-year yield posing a significant increase. Higher yields underpinned the dollar, but Wall Street equities posted sharp losses which help protect the yen and the dollar gains were held to just above 114.50 with the yen resilient on the crosses.

US equity futures moved lower on Thursday and Asian equities were firmly on the defensive amid expectations of global monetary tightening.

The yen maintained a firm underlying tone on the crosses and the dollar was held around 114.65 as markets also monitored geo-political tensions.




The latest YouGov survey recorded an increase in the one-year inflation expectations to 4.8% from 4.0% previously which was double the long-term average and the highest reading since the survey started in 2006. The longer-term expectations index held at a 5-year high of 3.3%. The data is likely to maintain concerns within the Bank of England over the risk that expectations will move higher and increase upward pressure on wages.

Sterling held a firm tone during European trading as risk appetite maintained a firmer tone. The Euro retreated to just below 0.8350, but the UK currency hit selling interest above 1.3500 against the dollar. There were no substantive political developments during the day with markets waiting for the Gray report.

The dollar strengthened after Fed Chair Powell’s comments and risk appetite also dipped which pushed Sterling to the 1.3450 area. Expectations of Bank of England rate hikes were offset by stronger expectations of Fed rate increases and the UK currency settled close to 2-month lows around 1.3430 against the dollar on Thursday with the Euro around 0.8350. Markets will continue to monitor political developments, although risk conditions are likely to have a more substantial currency impact.




The Swiss ZEW business expectations index strengthened to 9.5 for January from 0.0 the previous month. The franc edged lower in European trading on Wednesday with potential defensive demand curbed by a firmer tone in global equity markets. The Euro edged higher, although there was dollar selling interest above the 0.9200 level. The dollar secured fresh traction after Powell’s comments with a move to around 0.9240 against the franc.

The potential negative impact on the Swiss currency of low yields was offset by fragile risk appetite and the dollar was held close to 0.9250 on Thursday.

Technical Levels



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

Our daily commentary, covering market news and closing prices of LME aluminium, copper, lead, nickel, tin, zinc, iron ore, steel, and precious metals.

Daily Report Softs Technical Charts

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

Weekly Report FX Options

Our FX Options Report contains commentary and analysis covering OTC currency option pricing, volatility and positioning. This week’s focus is on EURPLN and the currency trajectory following the deteriorating economic outlook in Europe and rising rates in Poland.

FX Monthly Report May 2022

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we look at the current inflation outlook across LATAM, Europe, U.S. and U.K. and gauge if central banks will slow their rate hikes. Economic data is weakening and China's poor growth and woeful demand could impact policy makers' decisions. 

Quarterly Metals Report – Q1 2022

Our analysts provide in-depth analysis into the current macroeconomic conditions and how near-term choppiness may subside in the coming months, once the Fed has confirmed its stance on Monetary Policy. The backwardated spreads in the metals market outline the tightness, and the geopolitical tensions between Russia and Ukraine could compound tightness in Europe due to lower energy, metals, and grain exports.