Mike Paterson’s Daily Forex Brief

After the initial knee-jerk reaction following the temporary fiscal cliff avoidance we’ve seen a sharp reversal as traders were quick to book profits on short-USD positions given the lack of follow-through and the uncertainties out there that I’ve been highlighting.

EURUSD has fallen back yet again and this time has dropped through the strong support lines around 1.3150 and so far seen a low of 1.3124 before a few ACB’s stepping in to snap up a few bargains. So in 24 hours we’ve already seen two-week highs (1.3308) and two-week lows (1.3124).

As each year begins we invariably see a flurry of activity and reversals of trends are not uncommon; whether this move is the start of something bigger remains to be seen. From my own trading experience I know that traders like to get the New Year off to a good start and it’s understandable to see these moves however fickle it may appear to the outsider.

It wasn’t just the EURUSD that came in for attack either with GBPUSD also seeing a major turnaround to test support around 1.6200 from yesterday’s heady highs of 1.6384. Overall the Pound has enjoyed mixed fortunes, improving a little against the Euro to test 0.8090 (1.2360) and the Swiss Franc before capping at 1.4956, but has fallen against the Aussie $ as AUDUSD clings to 1.0500 having finally breached it.

The US budget talks will be on-going as will the Eurozone problems and tomorrow brings us the little matter of the latest US Non Farm payrolls. Today sees a little data, but also the FOMC Minutes from their last meeting.

MSPFX forex websiteExpect more volatility for a while yet even if we may be pausing for breath for the moment.

As will the fans of the Premier League’s bottom club QPR who last night took three points at Chelsea and may yet start to believe that ‘Arry does indeed walk on water. We’re now in the January transfer window that can often make or break a club’s season.

And it’s hats off to Jacques Kallis who has become the first South African and only the fourth player in history to pass 13,000 Test runs which he duly completed on his way to scoring 60 after SA had dismissed the Kiwis for 45 yesterday, the lowest Test total since 1974.

Seems like January is proving to be a lively one all-round.

Interbank Rates at 08:38 BST

Currency Pair


EURUSD 1.3158
GBPUSD 1.6232
EURGBP 0.8105
GBPEUR 1.2334
GBPCHF 1.4921
GBPAUD 1.5445
EURCHF 1.2097
GBPHKD 12.5847
EURHKD 10.2032
GBPZAR 13.8352
USDJPY 87.12
GBPCZK 31.1188

Today’s Data: BST

09.30-UK – Construction PMI

13.15-US – ADP Non-Farm Employment Change / Weekly Jobless Claims

19.00-US – FOMC Minutes

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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