1. Reports
  2. Daily FX Report



German manufacturing and services sector were both in contraction territory for September and below expectations which maintained fears over the outlook.

The Euro-Zone PMI manufacturing index retreated to a 27-month low of 48.5 from 49.6 and slightly below forecasts while the services index retreated to a 19-month low of 48.9 from 49.8 with both figures slightly below market expectations. New orders declined sharply on the month while business confidence dipped sharply to the lowest level since May 2020. There was a renewed increase in costs and output charges increased at a faster rate despite weaker demand as companies protected margins.

The US PMI manufacturing index edged higher to a 2-month high of 51.8 for September from 51.5 previously and slightly above consensus forecasts of 51.1. The services-sector strengthened to a 3-month high of 49.2 from 43.7 and well above expectations of 45.0, although this was still the third successive month in contraction.

There was a further net easing of upward pressure on costs and selling prices, although pressures were still strong in historic terms. The data overall increased expectations that the US economy would out-perform Europe which provided additional dollar support with a surge to fresh 20-year highs with the Euro sliding.

CFTC data recorded a sharp reversal with investors moving to a net long position of over 33,000 contracts from a 12,000 short previously, increasing the scope for renewed position liquidation. Exit polls confirmed that the Brothers of Italy will win the Italian election with a right-wing coalition expected. The Euro remained under heavy pressure with 20-year lows below 0.9600 before a slight recovery to 0.9630 while the dollar corrected slightly from the surge to fresh 20-year highs seen in Asia.




US Treasuries were little changed ahead of Friday’s US open, but were then subjected to renewed selling following the stronger than expected US business activity data. The 10-year yield jumped to highs just above 3.80% before a retreat to below 3.75% and the 2-year yield hit a fresh 15-year high.  High yields continued to provide strong dollar support. The dollar moved back above the 143.00 level against the yen. CFTC data recorded little change in short, non-commercial yen positions.

Former top currency diplomat Shinohara stated that it was unlikely that the 145 level against the yen would be defended as a line in the sand with action limited to a smoothing operation. The yen gained some slight relief on the crosses, although the dollar posted further net gains to just above 144.00.




The UK September PMI manufacturing index edged higher to a 2-month high of 48.5 from 47.3 the previous month and above consensus forecasts of 47.5, but was still below the 50.0 level. The services-sector index declined to a 20-month low of 49.2 for the month from 50.9 the previous month and slightly below market expectations of 50.0. Overall business confidence declined to the lowest level since May 2020. Output prices increased at the slowest rate for 8 months, although still elevated.

Chancellor Kwarteng announced even more aggressive tax cuts than expected. As expected, the National Insurance increases were reversed and the planned corporate tax increases for next year were cancelled. In addition, there will also be income tax cuts from next April. The government expects that the energy guarantee scheme will cost £60bn over the next six months. Government borrowing will increase substantially for the next three years. The 2022/23 requirement is set to increase by £72bn to over £160bn with deficit likely to remain above £100bn over the following few years. UK yields increased sharply with the 5-year yield surging over 50 basis points to above 4.05% with the sharpest moves for over 30 years. Markets also expect that the Bank of England will have to raise interest rates more aggressively.

Overall confidence in the UK and Sterling outlook deteriorated sharply with heavy Sterling losses. The UK currency plunged to 37-year lows around 1.0850 against the dollar while the Euro surged to 20-month highs just above 0.8900. CFTC data recorded a decline in short, non-commercial Sterling positions to just below 55,000 contracts from 68,000 previously which suggests there is still scope for Sterling selling. The UK currency crashed in Asia on Monday with a record low against the dollar below 1.0400 before a correction to near 1.0600 with the Euro also surging to 2-year highs above 0.9200  before a limited correction as overall confidence collapsed.




The Swiss franc gained renewed support on Friday as a further slide in risk appetite boosted demand for the Swiss currency. Equity markets moved sharply lower which increased defensive support for the franc. The Euro dipped to lows at 0.9500 before a tentative recovery while the dollar gains were held to just above 0.9800.

The surge in volatility was another key element providing franc support with the Euro at fresh 7-year lows near 0.9420 before a recovery to 0.9480. The dollar advanced marginally to highs near 0.9850 and markets will be on alert for comments from the National Bank given the surge in market volatility.

Technical Levels 

260922 Tech


260922 Cal



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.