Mike Paterson’s Daily Forex Brief

As new Japanese PM Abe is sworn in so his desire to weaken the Yen kicks in and we’ve seen a major sell-off across the board as investors continue to factor in further monetary easing.

USDJPY has risen to 85.88 bringing with it EURJPY to 113.85 as it emerges that the new team coming in to manage the Bank of Japan in April have plenty of new and some unprecedented moves to loosen policy.

The knock-on effect on EURJPY has helped EURUSD climb back up to 1.3273 having held the strong support lines around 1.3150 that I mentioned before Xmas with EURGBP breaking up through 0.8200 (GBPEUR 1.2195). The big 1.3300 resistance level may yet prove one step too far again but we’ll know soon enough I reckon.

The move higher in EURGBP has been exacerbated by a continuing weaker tone in the Pound with GBPUSD failing to make any real gains and falling against the likes of the Swiss Franc to 1.4715.

Don’t forget though that these are post-Xmas/pre year-end markets and conditions are thin and scrappy, and there is the little matter of the US budget talks to take into consideration.

With just five days left to make a deal, President Obama and members of the Senate are set to return to Washington today with no clear path out of their fiscal mess, as the Treasury Department warns that the government will soon be unable to pay its bills unless Congress acts.

Like I said before, we’ll be seeing a lot more volatility in these markets before the year is out.

The mighty Shrimpers duly bagged another three points yesterday to extend their unbeaten run to 14 matches, news that will undoubtedly add to your Xmas cheer! With key games coming up let’s hope this wonderful run continues amongst the thrills n spills of League 2 football!

I hope you’re all having a brilliant Xmas wherever it’s taking you, and in great company as we also take time to remember absent friends.

Interbank Rates at 08:27 BST

Today’s Data: BST

13.30-US – Weekly Jobless Claims

15.00-US – CB Consumer Confidence

15.00-US – New Home Sales

Agree or disagree? Then please leave a comment in the box below or contact me by e-mail.

Mike ‘Oscar’ Paterson has been in the Forex trenches for nearly three decades working as a senior Spot trader in London at UBS, Chief Dealer FX at the State Bank of Victoria and in charge of Spot CHF at Credit Suisse with a daily turnover in excess of $1.5 billion. Mike now works as an independent consultant providing a fully bespoke service to the corporate and private sectors in physical FX delivery as well as guiding those who wish to improve their currency trading. Mike also presents seminars and workshops and writes for a number of publications.

To contact Mike please call +0044 (0) 1732 700383 or email mike.paterson@economicvoice.com

The views expressed above are those of the author and should not be taken as investment advice. MSP Foreign Exchange Services will have no liability for, or to, any persons executing trades based on the content above.

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