Mike Paterson’s daily Forex brief

As a certain calm descends upon the stock markets and Gold retreats from its record highs above $118 the main focus of attention now has been on the SNB and its determination to weaken the Swiss Franc with measures that I highlighted last week.


With the Dow above 11300 and FTSE, above 5300 for the moment at least, Gold has pulled back to $1728 before finding some good buying interest from China at these lower levels. Weekend press reports suggested that the SNB had a plan to put in place a lower limit on EURCHF, as yet undefined, and this has given the pair a significant impetus to its rally to reach highs thus far of 1.1461. Worth remembering that in the heat of the meltdown last week we saw an attack on 1.0000 so you will note just how much of an impact the SNB has had thus far. I did say in my years of trading the CHF that the SNB was not to be underestimated, even if this year and last they have presided over huge losses as the Swiss Franc has soared to ever record highs. From lows last week of 1.1500 GBPCHF has now surged to 1.3036.

This buying of EURCHF has put a floor under EURUSD and EURGBP for the time being with good support at 1.4245 and 0.8750 respectively (GBPEUR resistance 1.1430) even if we haven't seen too significant a rally as yet.

Elsewhere the Pound has eased slightly against the back in demand AUD and ZAR amongst others and has capped above 1.6300 versus the greenback. Chancellor Osborne’s reiteration that the UK is a safe-haven continues to fall on many deaf ears including mine.

Adding to the EUR support is weekend press suggesting that Germany is no longer ruling out joint EU bonds even though there is still some domestic opposition from the Finance Minister and others.

Nothing by way of data from UK or Eurozone today but this afternoon sees some key data from the US (see rate table below).

So that's your round-up as we enter another thin summer trading week where, frankly, it could all stabilize or kick-off again at any time.

My money's on the latter but it's a coin-toss call for the moment, something which is definitely not needed when it comes to England's emphatic victory, and thus series victory, against the Indians with one Test to play. The 3-0 lead assures us of the win by 2 scenario needed to secure No. 1 ranking in the world. Cricket fans amongst you won't need telling this but those of you not so keen hopefully will be pleasantly surprised and proud of our boys as we witness the first strains (and stains) of the football league season……Don't get me wrong, I love my football too (real football I mean, following Southend United!) but I can't see England being crowned kings of the world or the game being played in a similar spirit just yet…..

Have a good week dear readers.

Today's Data:

Weekly Economic Calendar-HERE

Interbank Rates as of 08.35 BST

Current Price

Overnight

High

Low

EUR/USD

1.4306

1.4330

1.4246

GBP/USD

1.6278

1.6310

1.6256

EUR/GBP

0.8790

0.8800

0.8747

GBP/EUR

1.1380

1.1433

1.1367

GBP/CHF

1.2978

1.3036

1.2653

GBP/AUD

1.5620

1.5745

1.5592

EUR/CHF

1.1412

1.1461

1.1077

GBP/HKD

12.6210

12.6460

12.6040

GBP/ZAR

11.6186

11.7190

11.5150

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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