Mike Paterson’s daily Forex brief
After another wobble yesterday morning EURUSD rose steadily from lows of 1.2175 to recent highs of 1.2314 as traders started to speculate that Fed Chairman Ben Bernanke will tend toward further monetary easing when he testifies before Congress later today.
Adding to the easing talk were weaker than expected US Retail Sales figures released yesterday which would make it appear that Mr B has little option now. But hey, he’s disappointed and surprised the markets before.
We also saw GBPUSD breach the 1.5600 resistance level and trigger stop-loss buying all the way up to 1.5679 before falling back.
In early trading yesterday morning with the Euro under pressure again EURGBP dipped to lows of 0.7832 not seen since October 2008 (GBPEUR up to 1.2768) but the pair was dragged higher during the course of the day as Euro buying prevailed in the USD sell-off.
Overall the Pound has shrugged off the IMF drastically cutting its 2012 growth forecast from 0.8% to 0.2% which suggests that it had already been factored in, but maybe attention is just focussed elsewhere just now.. This FX market is notoriously myopic as I have noted here many time before.
It’s certainly been a roller-coaster ride already this week and traders will have undoubtedly been caught out on both sides, and now we wait to see whether Bernanke comes to the easing party or not.. If he doesn’t then we can expect a sharp move all the way back down again.
UK inflation data out just now has come in weaker than forecast with CPI – 0.4% month on month and +2.4% year on year, the lowest reading since November 2009.. Driving it lower last month was the fall in clothing and transport/fuel prices. Little impact on the Pound as yet.
Those old rockers amongst us mourn the passing of Deep Purple’s keyboard player Jon Lord who died yesterday of pancreatic cancer. As the composer of many of their finest riffs including Smoke on the Water his legacy will live on for years to come.
Interbank Rates 08:47 BST
Today’s Data: BST
09.30-UK – CPI / RPI / DCLG House Price Index
10.00-EU – German ZEW Economic Sentiment / Eurozone ZEW Economic Sentiment
10.00-UK – BOE Governor King speaks
13.30-US – CPI
14.00-US – TIC Net Long Term Transactions
14.15-US – Capacity Utilization / Industrial Production
15.00-US – Fed Chairman Bernanke testifies
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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 email@example.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.