Mike Paterson’s daily Forex brief

We’ve seen a further fall / reality check in the Euro over the past 24 hours prompted by a combination of Greece bizarrely calling for a referendum on the EU bailout deal and soaring borrowing costs for Italy as their problems accelerate. Oh, and add to that crumbling European bank stocks and the collapse of MF Global.

EURUSD has fallen as low as 1.3675 in early European trading dragging with it EURGBP to 0.8572 (GBPEUR up to 1.1.1665). GBPUSD found some good buyers yesterday but has since fallen on the risk-averse trading sentiment. From the heady heights of 1.6168 yesterday we’ve now seen 1.5962 this morning.

Overall though the Pound is faring ok still and has gained over 350 pips versus the Aussie $ after the RBA last night cut interest rates by 0.25% and commodity currencies generally weaker still after last week’s strong rally.

The BOJ spent over $125 billion in its intervention yesterday and in doing so used up a lot of its credit lines with the banks it uses. Hence they have to now re-group before coming back in. and must still be rueing Shirikawa’s bizarrely mistimed comments just when they were trying to hold USDJPY above 79.00. Currently we’re back at 78.09 after an attempt to drive it up through 79.00 in Asia.

And talking of intervention there’s been a hint of SNB action this morning driving EURCHF up from 1.2140 to 1.2198, after a substantial sell off through 1.22 yesterday. No confirmation that the central bank has been in but the move back up just now was rapid.

Some major support lines have now been broken on Euro pairs but that doesn’t mean we’re in free fall just yet. There’s money to be made both sides of the action right now and we’re seeing the large players calling the tune, but there’s little doubt that the euphoria of last week was more a squeeze caused by stop-loss panic buying than hard cold fact.

This morning see the release of provisional Q3 GDP for the UK and traders will be sticking close to the newswires for more EU rhetoric whilst keeping a close eye on equity markets and bank stocks in particular. US data out this afternoon will have impact too.

It’s all starting to look rather ugly again.

STOP PRESS: UK Q3 GDP (P) up 0.5% q/q and up 0.5% y/y. slightly better than forecast but GBP lower on awful Manufacturing PMI data of 47.4 versus 50 forecast. Lowest reading since June 2009.

Today's Data:

Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08:12 BST

Current Price

Overnight

High

Low

EUR/USD

1.3709

1.3872

1.3708

GBP/USD

1.5985

1.6094

1.5962

EUR/GBP

0.8575

0.8624

0.8572

GBP/EUR

1.1660

1.1665

1.1593

GBP/CHF

1.4223

1.4233

1.4090

GBP/AUD

1.5451

1.5467

1.5215

EUR/CHF

1.2187

1.2197

1.2138

GBP/HKD

12.3931

12.4776

12.3753

EUR/HKD

10.6287

10.6966

10.6748

GBP/ZAR

12.8248

12.9379

12.7437

USD/JPY

78.09

78.99

78.00

GBP/CZK

2.8995

2.9139

2.8797

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.

Comment Here!

comments