Mike Paterson’s daily Forex brief
I keep saying the FX markets are notoriously fickle and never more so than in the past 24 hours where we’ve seen a complete turn around in risk sentiment, on nothing more than a reality check on Europe and on-going concerns over China, both economically and politically.
A scrappy day yesterday in tight ranges saw the US $ gradually taking back the reins as the current market fave, closely followed by the Yen and this morning weaker than expected European data has given the Greenback a further boost in volatile trading.
EURUSD has fallen back over 100 tics to 1.3135 since yesterday’s high, much of it in the past few hours, while the Aussie continues its own downward path/reality check at 1.0355 versus the USD with GBPAUD up at 1.5299 at one point.
With risk-off back in mode the Yen has strengthened and this in turn has seen an unwinding of EURJPY, GBPJPY and AUDJPY positions. USDJPY is now back below 83.00
Weaker than expected Chinese data overnight and Eurozone numbers this morning have only fanned the flames of uncertainty, while the awful UK Retail Sales figures just out have also given the Pound a slap with GBPUSD testing support around 1.5780 and EURGBP back up around 0.8335 (1.1997) having been looking to test below 0.8300 (1.2048) earlier this morning.
Yesterday’s UK Budget had limited impact with economists and political commentators far more qualified than me in agreement that it was fiscal-neutral but a huge political statement/gamble. Far more important was the PSNBR number out prior which showed a massive increase highlighting, along with the Budget shuffle, that current austerity measures are starting to hurt badly and previous forecasts are null and void. Why anyone should be surprised by this remains a mystery to me as I have been carping on about the time-lags on this for ages.
Anyhow, it’s been a busy, volatile, start to the day and I can’t see it easing off with US weekly jobs data at 12.30 GMT and ECB President Draghi later on.
Traders remain nervous, cautious and scared to run anything for too long. A perfect recipe for some fun n games out there…….
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