Mike Paterson’s daily Forex brief
We’ve seen some further sell off in the Euro on continuing Eurozone debt concerns and the Fitch ratings agency painting a gloomy picture ahead which led traders to think a French downgrade was imminent, but the Pound has come in for a correction lower too on the back of poor trade data and another UK reality check.
EURUSD went down to test major support again around 1.2665 but has since rallied this morning to 1.2733 with the help of some sovereign buying and a better than expected Spanish debt auction. EURGBP fell too initially but has since rallied strongly in NY and overnight on the back of large GBPUSD selling down to key support around 1.5270 ( 17 month lows ) and has broken back up through the 0.8300 ( 1.2048 ) pivot to so far reach a high of 0.8321 ( 1.2018 ). Sell orders are noted up there but the move higher will accelerate with stop-loss buying above 0.8330 (1.2005).
This morning we’ve seen a few buyers in GBPUSD back up to 1.5330 but overall the Pound has taken a hit with GBPCHF below 1.4600 again as traders test SNB resolve on the 1.2105 EURCHF level and it’s also down to 1.4849 versus the rampant Aussie. A quick look at the rate table below paints a similar picture and this morning’s weaker than expected industrial and manufacturing production data has only fanned the flames.
Main focus today remains the interest rate decisions from the BOE and ECB so we should see some short covering going into these announcements even though we expect neither central bank to change. The ECB press conference at 13.30 should bring the usual fun n games as traders look for clues to future policy and journalists try their damndest to outwit the President.
Should little of note emerge then expect the Euro and Pound selling to resume although we do have some US data to consider this afternoon.
All in all a scrappy day ahead methinks.
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