Mike Paterson’s Daily Forex Brief

We’ve seen the Euro make further gains as traders were stopped out of short positions once key resistance levels were broken. Lending weight to the move higher was ECB director Asmussen, the German appointment of Chancellor Merkel, who came out in support of the “Draghi Plan” for large scale bond purchases, in apparent opposition to the stance of the Bundesbank.

Yesterday I mentioned that we were seeing good demand from the ACBs but that we had a good size barrier option sell interest at 1.2450. Well, after a decent attempt to protect it we saw it break which then triggered another wave of Euro buying. So far it’s stalled ahead of the next supposed barrier option at 1.2500. Decent buying interest around 1.2440 then 1.2380.

The jury is still very much out on whether increased ECB bond purchases will have the desired longer term effect but for the moment sentiment seems to be supporting the idea. So we’ve seen EURGBP also forced higher to test resistance at 0.7910 (GBPEUR down to 1.2642) ahead of further sell areas around 0.7925 (1.2618) and renewed buying of EURAUD after reports that the Australian mining boom might be reaching its peak next year.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

This news also saw GBPAUD pick up some buyers again and we’ve seen a move to 1.5136 so far but the sell interest around 1.5800 on GBPUSD that I mentioned yesterday is proving a tough nut to crack and overall the Pound has fallen back as I suggested it might. We’ve been up to 1.5810 before retracing lower but as I type there’s another attempt going on and we’re trading at 1.5818. Should be a good battle from here.

Little in the way of data today but tonight sees the release of the Minutes from the last FOMC meeting on interest rates and markets will be keen to see if we can glean any more clues on US monetary policy – the key event of the day.

And another one will be the re-appearance of wonder horse Frankel at York’s Ebor Festival in perhaps his toughest test so far over the extended distance of a mile and a quarter. Will it be unlucky 13 after 12 straight wins? Highly unlikely.

Interbank Rates at 08:53 BST

Currency Pair

Current

Overnight

High

Low

EUR/USD 1.2460 1.2478 1.2447
GBP/USD 1.5795 1.5803 1.5765
EUR/GBP 0.7889 0.7910 0.7887
GBP/EUR 1.2672 1.2681 1.2641
GBP/CHF 1.5224 1.5232 1.5044
GBP/AUD 1.5101 1.5136 1.4966
EUR/CHF 1.2010 1.2013 1.2008
GBP/HKD 12.2459 12.2521 12.2226
EUR/HKD 9.6637 9.6924 9.6385
GBP/ZAR 13.1184 13.1456 13.0001
USD/JPY 79.32 79.36 79.15
GBP/CZK 31.4663 31.5549 31.2864

Today’s Data: BST

15.00-US – Existing Home Sales

19.00-US – Fed FOMC Meeting Minutes

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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