Mike Paterson’s daily Forex brief

With the UK off for the past 2 days we’ve seen some decent levels of action in thin markets, resulting in the Euro making the most of USD negative news but still running into sellers as Eurozone fears remain firmly in the mix.

Talk of Spanish banks needing more help gave the single currency early- week wobbles with EURUSD heading down to 1.2441 but then Federal Reserve President Charles Evans gave a speech last night which called for a more accommodative policy and we saw Euro-shorts and USD-longs scrambling for cover.

EURUSD has rallied to 1.2528 and GBPUSD up to 1.5489 from lows of 1.5372 but in both cases there’s plenty of sellers lurking to take advantage of any second/third chances to get short. But USDJPY has burst higher after the emergency G7 conference-call on the Eurozone saw the Japanese Finance Minister calling for concerted help to weaken the Yen but threatened to go it alone anyway. And, shock, the G7 did little in response in either that matter or for the Eurozone.

The Pound overall continues to lose its shine as I’ve been predicting, with GBPCHF down to 1.4808, GBPAUD down again to 1.5632 even after an Aussie interest rate cut of 0.25%, and GBPZAR below 13.00 once again.

This weaker GBP/steadier EUR tone has seen EURGBP climb as high as 0.8111 (GBPEUR down to 1.2327) but with the highlight today being the ECB interest rate decision at 12.45 and all important press conference at 13.30 BST the next move remains a coin-flip.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

It’s not impossible that the ECB could cut rates or at least give a clear easing signal. Analysts don’t expect it but it’s possible given all that’s going on and would make some sense. All will be revealed soon enough.

Stocks have steadied and Gold has made the most of the US easing talk and poor US jobs data last Friday by surging 4% on that one day alone and has levelled a little now around $1633.

Meanwhile in the world of sport, Tiger roars again, Roy digs in after his decision to overlook Rio once more, and Andy battles on at Roland Garros.

Quite a week shaping up all round.

Interbank Rates 08:54 BST

Currency Pair

Current

Overnight

High Low
EUR/USD 1.2520 1.2528 1.2441
GBP/USD 1.5466 1.5489 1.5372
EUR/GBP 0.8095 0.8111 0.8080
GBP/EUR 1.2352 1.2378 1.2327
GBP/CHF 1.4836 1.4866 1.4808
GBP/AUD 1.5671 1.5798 1.5632
EUR/CHF 1.2009 1.2013 1.2008
GBP/HKD 11.9908 12.0086 11.9179
EUR/HKD 9.7075 9.7417 9.6283
GBP/ZAR 12.9778 13.0190 12.8667
USD/JPY 79.12 79.28 78.61
GBP/CZK 31.5098 31.7662 31.4854

Today’s Data: BST

10.00-EU- Eurozone GDP (Prov)

11.00-EU- German Industrial Production

12.45-EU- ECB Interest Rate decision

13.30-EU- ECB Press Conference

19.00-US- Federal Reserve’s Beige Book

02.30-AU- Australian Unemployment

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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