Mike Paterson’s daily Forex brief.

Well, they've done it! England easily beating India in 4 days at Trent Bridge to take a 2-0 lead. More of that that later because there was another event taking place yesterday that had a few people glued as well …. .


The US House of Represenatives voted for the debt ceiling bill by 269-161 and it now moves to the Senate today for the final seal of approval on the last allotted day…..Politicians acting out a soap opera in the land of, err, soap opera……….

It was widely viewed that yesterday's vote presented the most serious challenge and it certainly sent some jitters down the market's already very tingly spine ……. . Equity markets fell, Gold rose to new record highs, and the Swiss Franc, discarded as recently as this time yesterday, was back in the fold and by a long way once again the safe-haven of choice. USDCHF fell to new record lows of 0.7751, and EURCHF got trashed to its own record lows 1.1030 and further in Asia to 1.0986. GBPCHF has therefore also dumped to 1.2619 from trying to hold above 1.3000……..crazy days…….

The EURCHF freefall as traders had to liquidate long positions also sent EURUSD reeling downwards and from yesterday's highs of 1.4456 (I did tell you there was some strong option-related sell interest around 1.4450) we've since seen a fall to 1.4157 overnight where we've had the usual Asian Central Bank buying with China soaking up a few down there, then buying some Spanish bonds – therefore sending EURUSD higher again. More low-hanging bamboo for the greedy Giant Panda …….. .

The Euro sell-off also eventually sent EURGBP lower through key support around 0.8740 and overnight we've since seen a move on the next key level of 0.8700 (GBPEUR up to 1.1497) as GBPUSD holds up a little better in the prevailing climate of USD buying since the first vote went through..

Yep , confusing I know… the market seems to buy USD when it's looking dodgy and sell when it should be buying as well as buying when it should be buying.. In this case traders have just got their fingers burnt big-time and we're none the wiser. Welcome to the wonderful world of foreign exchange …… .

18_13_12_prevThe RBA last night voted to keep Australian interest rates on hold catching a few traders and analysts on the hop and we've seen an AUD sell-off forcing GBPAUD toward 1.5000 and the pick-‘n-mix bag of Pound prices continues (see rate table below).

So all eyes on the Senate (voting takes place around 17.00 BST) but can we expect more fun n games before then….?. Oh yes, we can…(any pantomime reference is entirely intentional………)

England's cricketers go 2-0 up in the 4 match series against India with a powerful display and as it stands become, in theory, the No. 1 team in the world ………. . Someone pass the oxygen… As a cricket nut for over 40 years I'm going to have to acclimatize to these heady heights ……….. Come on England!!!!

Today's Data:

09.30-UK – Construction PMI

10.00-EU – Eurozone PPI

13.30-US – Core PCE Price Index / Personal Income / Personal Spending

00.01-UK – BRC Shop Price Index

Interbank Rates as of 08.37 GMT

Current Price

Overnight

High

Low

EUR/USD

1.4205

1.4283

1.4157

GBP/USD

1.6295

1.6331

1.6261

EUR/GBP

0.8717

0.8759

0.8699

GBP/EUR

0.8699

1.1497

1.1415

GBP/CHF

1.2665

1.2813

1.2619

GBP/AUD

1.4955

1.4988

1.4815

EUR/CHF

1.1044

1.1207

1.10986

GBP/HKD

12.6340

12.6620

12.6080

GBP/ZAR

10.9443

11.0142

10.9263

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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