Mike Paterson’s daily Forex brief

The Merkel-Sarkozy talks were the non-event we expected and we've seen little reaction in the forex market.


They've asked for closer Eurozone economic governance, headed by EU President Van Rompuy and that all 17 nations should introduce balanced budget amendments to constitutions by mid-2012. There were also calls for a financial transaction tax.They did not propose common euro bonds, or increasing the size of EFSF, and Ireland was asked to raise corporation tax.

Well, thanks for turning up. This isn't going to get the baby new shoes. Although the Euro did enjoy a brief rally afterwards to key resistance at 1.4500 versus the US Dollar the suggestion of a long sought after financial transaction tax put the dampeners under it a bit as the reality would be a move away from trading with the Eurozone and we've seen a fall back to 1.4324, exacerbated by the SNB's

lack of putting a peg/lower limit level on EURCHF this morning.

This really did set the cat amongst the pigeons after the expectation that an announcement would be made but this morning's communique included no such measures amongst the new ones introduced.. They may well be keeping their powder dry but it backfired in the short term as traders were caught the other way and EURCHF plummeted from 1.1550 to 1.1221, dragging EUR down across the board and GBPCHF down to 1.2800 from the heady heights of 1.3179…….

EURGBP fell as well though and we touched a low of 0.8730 (GBPEUR up to 1.1460) before steadying.

STOP PRESS : UK data just out shows jobless claims up 37k, worse than expected and biggest rise since May 2009…Claimant count rate now 4.9%.. Minutes from the last MPC meeting show a 9-0 vote to keep rates on hold with no one now looking for a rate hike.. This double whammy has given the Pound a slap and we've seen a drop in GBPUSD to 1.6350 (strong support line) and EURGBP move up to 0.8790 (GBPEUR down to 1.1367)

All the fun of the forex fair, and there's more data to come today from the Eurozone and US …

Pot still simmering nicely……………..

Today's Data:

Weekly Economic Calendar-HERE

Interbank Rates as of 08.35 BST

Current Price

Overnight

High

Low

EUR/USD

1.4398

1.4418

1.4324

GBP/USD

1.6443

1.6459

1.6402

EUR/GBP

0.8757

0.8773

0.8730

GBP/EUR

1.1420

1.1456

1.1397

GBP/CHF

1.2937

1.3179

1.2837

GBP/AUD

1.5654

1.5741

1.5638

EUR/CHF

1.1336

1.1550

1.1221

GBP/HKD

12.7490

12.7610

12.7170

GBP/ZAR

11.6830

11.8328

11.6644

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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