Mike Paterson’s daily Forex brief
The Euro has continued to consolidate despite little of substance (shock) from the Merkozy talks yesterday but the big news was the resignation of the Swiss National Bank’s President Philipp Hildebrand in the wake of the recent currency trading scandal involving him and his wife.
He said again that he made mistakes and an error of judgment (most definitely!) but was adamant that his tenure at the helm was a positive one and that current policy was correct (eh? how about the billions of Francs lost by trying to stem the currency’s appreciation before the peg was placed?) and would be continued.
The market’s immediate reaction was to test the resolve of the SNB and set about selling EURCHF and USDCHF and while the previously defended 1.2125 level gave way in a rush it appears they’ve re-camped at 1.2105 which has since been tested again this morning but still not broken. The SNB have re-iterated its commitment to defend the 1.2000 peg and it looks like Thomas Jordan an existing board member will get the nod to take over. Either way this is an unprecedented and embarrassing episode for the SNB and seriously harmed its reputation.
Meanwhile back in the Eurozone the Merkozy talks offered little but these were just the first in a series of meetings this week where we can expect more of the same. Today Merkel meets IMF head Lagarde. EURUSD found buyers and sellers but this morning is edging higher again at 1.2793. There’s talk of stop-loss buying above 1.2810 but a good size seller poised around 1.2830. EURGBP had a dip lower but couldn’t break down through the 0.8240 support line I mentioned and currently sits around 0.8263 (GBPEUR 1.2102).
GBPUSD has attracted good two-way business but so far has failed to break back up above 1.5500, while the Pound overall is in sideways mode apart from losing ground to the rampant AUD and NZD which got a boost from better than expected trade figures from China even though the surplus was the lowest in 6 years……. Will that be the pattern for 2012? Think the absolute worst and then cheer when it’s not quite as bad as you feared but still awful…………?
Little in the way of data today, so we’ll pin our ears to the newswires again and start focussing on the ECB and BOE interest rate decisions on Thursday.
And finally, it would appear that footballer and utterer of strange phrases, Eric Cantona, is trying to canvass support for the French presidential elections later this year. While there’s little chance of him getting through to the second round of voting it does conjure up a marvellous picture of his Kung-Fu kick diplomacy being engaged at future EU summits. We can only hope eh?!!
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