Mike Paterson’s Daily Forex Brief
Yesterday was always going to be a scrappy day with most of Europe out for Assumption Day so it was little surprise that a row between China and Japan over disputed land should send a few tremors through thin summer markets.
Five Chinese activists were arrested by Japanese authorities after landing on the disputed islands of Senkaku, and with ambassadors being summoned and the Japanese PM saying the culprits will be dealt with according to the law; traders were keen to continue the USD buying/risk aversion trades of the previous 24 hours.
EURUSD has so far been down to test the next strong support at 1.2240-50 area but held thus far but EURGBP has fallen through strong support lines at 0.7850 but so far held the next strong level at 0.7825 (GBPEUR 1.2780). Adding to the downward pressure on the EURUSD has been talk of the SNB selling some of its recent EUR purchases that it accumulates when defending its EURCHF peg.
GBPUSD has also fallen and taken out a few stop-loss orders below 1.5690, so far hitting a low of 1.5635, while the Pound overall picks up a few gains after yesterday’s better than expected employment data, although that has to be a short-lived Olympic effect. Talk of a few sovereign names with buying interest on GBPUSD this morning.
Various bits of data out today kicking off with UK Retail Sales and we can anticipate another scrappy day.
And talking of scraps England’s cricketers begin one today at Lords to try and save the 3 Test series and keep themselves at the top of the world rankings. Not so long ago Lords used to be a pitch for draws (trust me, I’ve spent many a day up there watching paint dry in preference) but in recent times it’s lent itself to many an exciting result. England will have to be at their very best but this cynic has a feeling they can pull it off.
Stop Press: UK Retail Sales higher than expected and we’re seeing some decent knee-jerk Pound buying with GBPUSD testing 1.5700 and EURGBP now broken down through the 0.7825 support line currently at 0.7817 (1.2792).
Have a good day everyone. I’ll be out today and tomorrow (guess where?!) but on my mobile if you need me.
Interbank Rates at 08:48 BST
Today’s Data: BST
09.30-UK – Retail Sales
10.00-EU – Eurozone CPI
13.30-US – Building Permits / Housing Starts / Weekly Jobless Claims
15.00-US – Philadelphia Fed Manufacturing Index
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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 firstname.lastname@example.org
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.