Mike Paterson’s daily Forex brief

The ECB and BOE yesterday left interest rates and QE on hold as expected, but the encouraging tone from ECB President Draghi sent traders running to cover a few Euro-short positions.

At the press conference Draghi played an understated but controlled hand and talked of tentative signs of stabilization in the Eurozone, saying that the LTRO (Long Term Refinancing Operation) is supporting the banks and allowing them to refinance expiring bonds. He also noted signs of interbank lending getting a little easier and said that the ECB would be expanding collateral further for the next 3-year LTRO and hinted that interest rates may yet come down further.

Markets responded positively to this and to the fact that yesterday’s Spanish and Italian bond auctions went well. EUR/USD tripped stops above 1.2780 and 1.2820/25, reaching 1.2846 before stalling ahead of strong technical resistance at 1.2847. EURGBP also rose to 0.8367 (GBPEUR 1.1951) before stalling.

Asian and early European trading has seen a further move higher to 1.2878 and 0.8377 respectively but has since fallen back to 1.2816 and 0.8352 on profit-taking and news that Spanish bank borrowing was sharply higher in December These markets are nothing if not fickle and currently seem to be looking to square up positions at the slightest whims be the news positive or negative. EURUSD will now have buyers at 1.2810 and 1.2780 and sellers at 1.2860, 1.2890 and 1.2925

The Pound continues to look vulnerable to attack and this morning’s poor PPI data just out will do nothing to change that right now.

EURCHF fell through the 1.2105 support line where the SNB were rumoured to be sniffing around but we dipped to 1.2094 without any sign of them Traders will remain cautious though on this pair the nearer we get to the 1.2000 peg.

Gold had a run up to the next immediate resistance point around $1665 but it too has run out of puff and is currently back at $1643. A close below $1640 may well trigger further sales and prove this rally had little momentum. The jury is out.

FX Update

FX Update

It’s Friday, and the 13th and we have little data to speak of with the US looking forward to a long week-end (Martin Luther King day on Monday) so it’s likely to be another scrappy session and a bit of a coin-flip at this point.

Hopefully not so tomorrow when the mighty Shrimpers look to continue their return to winning ways.

Can’t say I’m as pleased with the goings-on at Essex CC though. Sad days but with county players being paid peanuts it’s not exactly surprising that spot-fixing bribes can easily turn the head of any young player  This incident happened 2 years ago and a lot’s been done since then to improve awareness and hopefully not to be repeated. Fingers crossed.

Have a great week-end all.

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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