Mike Paterson’s Daily Forex Brief
After starting the week on a softer tone we saw the Euro firm up again yesterday after the ECB dismissed a report in Germany’s Die Spiegel magazine that said the central bank may be planning to cap borrowing costs for peripheral Eurozone states.
After sticking to its “no-comment” policy earlier on the ECB, perhaps mindful of the result of their lack of response last time, decided later in the day to issue a statement denying the report. The move was not lost on the markets and highlights the sensitivity over the prospect of a new ECB bond purchasing programme which has now become a major discussion point. The fear is that the ECB would be seen to be promising accelerated action for which they do not have the mandate to deliver and facing strong Bundesbank opposition.
Anyhow, while that particular debate continues we saw EURUSD rally from 1.2294 up to 1.2449 but has since fallen back to consolidate around 1.2400 as traders once again are quick not only to run for cover but equally quick to take profits too as markets continue in their summer malaise. There is talk of a large barrier option to be defended at 1.2450 hence it capping there thus far but this morning we’ve also seen a decent ACB (Asian Central Bank) interest to buy in the dips.
GBPUSD has also had another rally up to 1.5762 but the Pound generally is lagging a little and we’ve seen EURGBP hold above the 0.7850 pivot line (GBPEUR capped at 1.2738). GBPAUD has retreated back below 1.5000 as the Aussie $ finds a few buyers again after Minutes from the last RBA interest rate meeting make no reference to any need for intervention to stem Aussie $ strength.
GBPCHF has capped at 1.5300 and with talk of large barrier option selling interest on GBPUSD at 1.5800 we should the Pound struggling to make any real gains today as eyes remain focussed on the Eurozone.
So England lose their No 1 Test cricket ranking to a better side despite a spirited attempt to chase it down yesterday. I said at the outset of this Test that I thought England might nick it against the grain if they played at their best. Sadly that wasn’t the case and a bunch of dropped catches plus a distinct lack of runs from the top order will give them plenty to think about. Congrats to South Africa though for a thoroughly deserved series win.
Interbank Rates at 08:48 BST
Today’s Data: BST
09.30-UK – Public Sector Net Borrowing Requirement
11.00-UK – CBI Industrial Trends Orders
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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 email@example.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.