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.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

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.

Enjoy…..

Interbank Rates 08:47 BST

Currency Pair

Current

Overnight

High Low
EUR/USD 1.2297 1.2314 1.2265
GBP/USD 1.5631 1.5679 1.5624
EUR/GBP 0.7865 0.7868 0.7845
GBP/EUR 1.2710 1.2748 1.2708
GBP/CHF 1.5265 1.5312 1.5263
GBP/AUD 1.5182 1.5272 1.5180
EUR/CHF 1.2009 1.2013 1.2008
GBP/HKD 12.1187 12.1559 12.1133
EUR/HKD 9.5348 9.5655 9.5021
GBP/ZAR 12.7735 12.8916 12.7706
USD/JPY 79.00 79.06 78.79
GBP/CZK 32.2423 32.3599 32.2000

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

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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