Mike Paterson's daily Forex brief.

It appears that the US Democrats and Republicans have come to the expected 11th hour agreement to raise the debt ceiling and thus postpone the US going into default. I say postpone because this will be an uneasy peace and will have to be addressed again down the line, once it is officially voted through later today.


The market has had a muted reaction but generally it has encouraged a more risk-on sentiment and we've seen Gold cap at new record highs of $1627.40, equity markets breathe another sigh of temporary relief and the Euro find some renewed support.

EURCHF was at one point down below 1.1300 but has rallied on the US news, as the Swiss France once again finds itself at the behest of a change in safe-haven sentiment, dragging the EUR up with it across the board. EURUSD has been up to 1.4425, just shy of 1.4450 barrier option resistance while EURGBP is also off its lows at 0.8755 (GBPEUR 1.1430).

Elsewhere the Pound has consolidated at the lower levels seen at the end of last week but GBPUSD has taken advantage of the USD selling to climb up to 1.6476 before finding a few sellers.

Once US Congress has approved the debt measures focus will quickly shift to what else is happening this week, notably the BOE and ECB interest rate decisions this Thursday. Both are expected to keep them unchanged but as ever we will await the ECB press conference after the decision to glean any clues on future policy. Before that we have another keenly awaited event with the Reserve Bank of Australia making their interest rate decision tonight with analysts split but many thinking they will hike by 0.25%.

So as the thin summer markets continue with traders away busying themselves with buckets and spades and topping up their tans we can expect another scrappy week ahead.

And so to the cricket…..what another fantastic test match, enhanced by yesterday's Spirit of Cricket moment when the Indians re-instated Ian Bell who had rightly been given out.Without harping on about it, (cos let's face it the game has had its fair share of justified bad press in the past couple of years), it would be good to see other sports, football obviously, follow the lead shown by MS Dohni and his team…Yesterday's terrific batting performance though by England should mean a comfortable victory with two days left even though this wonderful game will undoubtedly produce a few nerve-jangling moments along the way…….

Have a good week everyone, well, those of you still at your desks and reading this!

Today's Data:

09.00- EU – Eurozone Manufacturing PMI

09.30-UK – Manufacturing PMI

10.00-EU – Eurozone Unemploymrent Rate

15.00-US – ISM Manufacturing Index / Construction Spending

Interbank Rates as of 08.37 GMT

Current Price

Overnight

High

Low

EUR/USD

1.4388

1.4425

1.4345

GBP/USD

1.6432

1.6476

1.6387

EUR/GBP

0.8755

0.8796

0.8735

GBP/EUR

1.1415

1.1450

1.1384

GBP/CHF

1.3062

1.3096

1.2888

GBP/AUD

1.4867

1.4951

1.4845

EUR/CHF

1.1422

1.1454

1.1299

GBP/HKD

12.7400

12.7740

12.7050

GBP/ZAR

10.9440

11.0200

10.9186

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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