Mike Paterson’s daily Forex brief
Seems like the markets are liking a little more risk at the moment and we’ve seen EURUSD finally stay up above 1.2830 after an extremely whippy day yesterday, while equities are also a little firmer this morning.
EURUSD was up and down like the proverbial yesterday on news and counter-news, but we closed above 1.2830 and early European trading has seen another shove higher to test the next strong resistance around 1.2900. Talk of large stop-loss buying to take place if we get above 1.2910. The short positions taken earlier this week are definitely being squeezed out by this move but there’s a long way to go before we can talk about any major reversal of trend in place.
Fuelling the move has been talk of the Greeks getting their act together and hopefully producing a deal on their debt by the week-end, plus a couple of EZ country debt auctions going ok. The IMF yesterday called for another â‚¬500-â‚¬600 billion to help Eurozone countries and this will be discussed at the G20 meeting in Mexico. EZ countries have already promised â‚¬150 billion which is included in this figure but the US and others want to see more work done by the EZ members before committing to any more funding. Either way, and perhaps bizarrely if you consider this as throwing good/borrowed money after bad/printed money, it seemed to appease the markets and gave the Euro another fillip.
EURGBP has stalled at 0.8355 (GBPEUR 1.1968) so far but still seems well supported while EURJPY and EURAUD are both higher with the former threatening to break up through key resistance at 99.00 after earlier in the week failing to break through key support at 97.00.We’ve seen further buying on EURAUD after weaker than expected jobs data from OZ last night and there is no doubt that the market overall is short so a bigger squeeze is possible. These price actions of course impact on the Euro overall.
Yesterday’s UK unemployment data, which I briefly reported as I signed off, made horrible reading at 8.4% (a 17 year high) and another 118,000 job losses in the last 3 months. There were some signs of improvement in certain areas as the government, naturally, were keen to point out but these don’t disguise the fact that it’s going to get a lot worse before it gets better.
GBPUSD finally broke up through 1.5400 but overall the Pound is failing to impress once again.
US data this afternoon includes some key housing figures which will be keenly observed and we can expect more volatility while deciding whether this Euro consolidation has any more substance.
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