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

Daily FX Report

Read disclaimer

EUR / USD

 

German industrial production increased 2.7% for January after a revised 1.1% increase the previous month and above expectations of 0.5%.

The Euro gained ground ahead of Tuesday’s New York open with the EU aiming to issue bonds to help finance spending on energy infrastructure and defence spending with the clear aim to reduce dependency on Russian energy imports over the medium term.

The US NFIB small-business confidence index retreated to a 12-month low of 95.7 for February from 97.1 in January and below consensus forecasts of 97.5. There was further evidence of strong inflation pressure within the survey with a record number of companies looking to raise prices and a high number of companies reporting that inflation was their biggest problem. There will be further pressure for a tighter Federal Reserve monetary policy.

The overall US trade deficit widened to a record high of $89.7bn for January from a revised $82.0bn the previous month and above market expectations of $87.0 bn for the month with an increase in imports for the month coupled with a decline in exports.

The US Administration announced an immediate ban on oil imports from Russia which had been expected and oil prices failed to hold intra-day gains in very volatile trading. The Euro moves have been correlated to an important extent to moves in energy prices and the dip in oil prices helped trigger a renewed Euro recovery to near 1.0950 around the European close with caution ahead of Thursday’s ECB meeting also triggering a covering of short positions.

There was still significant selling interest on rallies with a quick retreat to near 1.0900 in choppy trading as the dollar attracted defensive support.

Currency-market volatility eased on Wednesday with investors monitoring global implications of the Ukraine crisis and the Euro traded around 1.0915 against the dollar.

 

JPY

 

US Treasuries lost ground ahead of Tuesday’s US open with the 10-year yield approaching 1.85% which helped underpin the dollar. Overall risk appetite remained fragile, however, with renewed losses for equities as market fears over global stagflation continued to increase. The dollar peaked close to 115.80 against the yen before edging back below 115.50 as the Federal Reserve remained in a blackout period ahead of next week’s policy meeting.

Wall Street indices posted significant gains into the European close which curbed potential yen demand to some extent and the dollar edged higher to 115.70.

Asian data release had little impact with Japan’s fourth-quarter GDP revised own to 1.1% from 1.4% previously while China’s CPI inflation rate was unchanged at 0.9% and in line with consensus forecasts while producer prices increased 8.8% over the year from 9.1% in January.

US equity futures stabilised on Wednesday, but there was net selling in Asian markets with China’s Shanghai index over 2% lower in late trading as overall confidence in the global outlook dipped further. The dollar was able to hold firm around 115.80 against the yen with the Euro around 126.40.

 

GBP

 

Sterling managed to stabilise after the European open on Tuesday, but struggled to gain any traction against major currencies. There were further concerns over the threat of a major hit to the UK economy, especially given a further jump in energy prices while there were also increased inflation fears which will make it increasingly difficult for the Bank of England to set monetary policy. The net balance of opinion suggested that the bank would be more cautious over rate hikes which curbed Sterling support.  The UK announced that it was aiming to phase out Russian oil imports gradually with the aim to stop all imports by the end of 2022 and there was notably choppy trading across asset classes, although Sterling moves were relatively limited.

The UK currency held just above 1.3100 against the dollar at the European close, but struggled to make any headway while the Euro secured a further net recovery to 0.8340. There was little change on Wednesday with the UK currency holding just above the 1.3100 level against the dollar.

 

CHF

 

The Swiss franc continued to lose support in early Europe on Tuesday with further position adjustment after the National Bank verbal intervention on Monday which fuelled concerns over the risk of increased franc sales by the central bank.

After a limited correction, the franc lost ground again towards the European close with the Euro advancing to around 1.0160 with the dollar also posting net gains to 0.9290.  The franc resisted further selling on Wednesday amid underlying risk aversion with the dollar around 0.9285.

 

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

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.