Mike Paterson’s daily Forex brief

The Euro fell again yesterday on continuing sovereign and bank debt concerns with the USD being the major beneficiary ahead of the key Non-Farm Payroll data out today which is being widely tipped to come in better than previously expected.

EURUSD has fallen through strong support lines at 1.2850 and 1.2780 to hit lows of 1.2762 overnight rallying a little since but now running into sell orders around 1.2820. EURGBP has hit 15 month lows of 0.8239 while EURJPY has fallen to 11 year lows around 98.50 prompting the Japanese Finance Minister to state that they are watching the pair closely and we’ve seen a move back up here and in USDJPY to 77.27.

The next major support for EURUSD comes in at 1.2600 then 1.2525 and, as I’ve been saying here for a few days/weeks now, there are plenty of sellers lining up to take advantage of any rally toward 1.3000 then 1.3200 so we will continue to see good two-way business but with a Euro negative bias overall. Sarkozy and Merkel meet again on Monday so we can expect some further cheap fighting talk but real money funds are definitely moving out of the Euro this week. The market may well be short still but it’s unlikely we’ll see enough of a rally to change the medium to longer term view any time soon. It’s the shorter term traders that will provide the immediate volatility.

The Pound overall is little changed, while Gold is struggling on this rally to hold above the key $1625 area but still seems well supported for the moment. Equity markets are going nowhere fast but I still expect these to trade lower in the months ahead.

Following on from yesterday’s story SNB President Hildebrand insists he and his wife did nothing wrong but on reflection admits that they “made mistakes” in the transparency of the trades and blamed political motives for the story reaching such proportions. We’ll see, but this isn’t going away in a hurry.

Key data out today apart from the NFP at 13.30 GMT includes Eurozone Retail Sales and Unemployment at 10.00 followed by German Factory Orders at 11.00 GMT so we can expect a lively end a week that eventually kicked into gear.

FX Update

FX Update

Talking of which, the mighty Shrimpers will need to get back into gear and return to winning ways this week-end having struggled to pick up points over the past 5 matches. Still in third place, though with a game in hand and only 4 points behind the leaders. Anyone’s title still, which looks like being the case in the Premier League too judging by recent results, but it would be remiss of me as a cricket nut not to mention the fine knock of 329 by Aussie skipper Michael Clarke who then added insult to injury by taking the wicket of Tendulkar when he looked poised to finally nail his 100th international century. The Little Master has now failed to achieve this notable feat on 21 occasions.

OK I must get back to business, and I wish you all a good week-end wherever it may take you

Today's Data:

10.00-EU- Eurozone Retail Sales / Eurozone Unemployment Rate

11.00-EU- German Factory Orders

13.30-US- Non-Farm Payrolls / Unemployment Rate / Average Hourly Earnings

Interbank Rates as of 08:36 BST

Current Price

Overnight

High

Low

EUR/USD

1.2803

1.2808

1.2763

GBP/USD

1.5513

1.5519

1.5475

EUR/GBP

0.8252

0.8258

0.8239

GBP/EUR

1.2116

1.2140

1.2108

GBP/CHF

1.4765

1.4803

1.4752

GBP/AUD

1.5121

1.5171

1.5089

EUR/CHF

1.2184

1.2199

1.2177

GBP/HKD

12.0272

12.0319

11.9977

EUR/HKD

9.9267

9.9371

9.8827

GBP/ZAR

12.6247

12.7131

12.5970

USD/JPY

77.15

77.27

77.05

GBP/CZK

31.1830

31.3850

31.1620

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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