Mike Paterson’s Daily Forex Brief

The Euro has continued its bullish run started toward the end of last week after Friday’s US Trade Balance data came in under expectations with the deficit widening to $48.7 billion and the highest level since April last year.

Add to this a general hope that the worst of the Eurozone crisis is seemingly on the wane based on a degree of general stability with the OMT facility still in reserve, and you’ve got an early-year market taking a punt on the Euro.

EURUSD surged on Friday through all the recent resistance and capped at 1.3366 before finally breaking through 1.3400 in Asia, a level not breached since April last year.

EURGBP, after finding recent support that I’ve mentioned, needed no excuse to also climb higher and we’re currently launching an attack on 0.8300 (GBPEUR down to 1.2048) as I type. These are also highs not seen since April 2012 so may provide a little resistance but the Euro is enjoying its moment and seems to have legs to go higher still.

EURCHF also saw a major leap and this has so far seen highs of 1.2249 last breached in December 2011.

So we’ve finally seen a break out of the tight ranges with the Euro being the market’s favourite in early year trading which invariably brings with it a shake-out.

GBPUSD had sellers at 1.6180 that I mentioned on Friday and had little appetite to follow the EURUSD rally, pegged back at every stage by the launch of EURGBP and we’ve seen GBPUSD in reverse gear down to 1.6114. Elsewhere the Pound is lower too. Seems to me that the spotlight is also falling on the UK with a less than favourable view, which should help shake up the complacent types out there.

Nothing in the way of data but we do have US Fed Chairman Bernanke speaking this evening so I reckon we’ll see some usual Monday jockeying ahead of that.. All in all we have a very interesting week ahead.

MSPFX forex websiteMeanwhile, sadly for all you new fans out there, I have to report another loss for the Shrimpers but let’s hope they can bounce back tomorrow night for the FA Cup replay with a 4th Round tie against Chelsea the prize. Man Utd though seem to be ploughing their way through to another Premiership in fine fashion after making short work of Liverpool yesterday

And congrats to Scott “Scotty” Waites who last night deservedly picked up his first BDO World Darts Championship in a disappointingly one-sided match. A darts event at The Lakeside is like no other sporting contest on the calendar and is all the more welcome for that.

Have a great week all, and stay warm.

Interbank Rates at 08:52 BST

Currency Pair


EURUSD 1.3357
GBPUSD 1.6124
EURGBP 0.8282
GBPEUR 1.2072
GBPCHF 1.4770
GBPAUD 1.5244
EURCHF 1.2233
GBPHKD 12.5009
EURHKD 10.3553
GBPZAR 14.0379
USDJPY 89.34
GBPCZK 30.8734

Today’s Data: BST

10.00-EU – Industrial Production

21.00-US – Fed Chairman Bernanke

00.01-UK – RICS House Price Balance

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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