Mike Paterson’s Daily Forex Brief
Month-end and M&A flows did indeed continue to dominate on Friday in scrappy trading conditions and the Euro was able to withstand another wobble despite Moody’s downgrade of the EU’s ESFS and ESM.
The one-notch reduction for the European Financial Stability Facility and European Stability Mechanism was expected in the wake of the recent downgrading of French sovereign debt but still caused a little Euro sell-off bu by the end of the afternoon’s month-end fixings it had recovered poise and natural flows dominated.
And the start of another month sees EURUSD at 1.3027 just below its overnight highs of 1.3048 with EURGBP at 0.8116 (1.2313) having capped at 0.8132 (1.2295) in Asia. EURUSD bids now come in at 1.3000-10 while selling interest is at 1.3050 and more at 1.3080. Buyers are noted in EURGBP between 0.8115-25 with sellers at 0.8150-60.
The Euro continues to find support from EURJPY buying interest and this is expected for a while longer yet. Buyers have also been seen in EURAUD as expectations rise for an RBA interest rate cut tonight despite better than forecast Chinese PMI data overnight.
GBPUSD has stayed camped above 1.6000 in the wake of the EURUSD buying buy continues to enjoy mixed fortunes overall.
The talks between Republicans and Democrats continue in a bid to avoid the so called “fiscal cliff” with economists warning that planned tax rises and spending cuts due to take effect on 1 January could trigger a recession.US Treasury Secretary Timothy Geithner has said there will be no deal to avert a "fiscal cliff" unless Republicans accept a tax hike for the wealthy. Expect these on-going talks to have increased impact on the markets.
Little in the way of data today, so we’ll see traders having a decent shadow box in the usual Monday fashion.
A truly amazing 38-21 victory was had by England’s Rugby Union team on Saturday as they put an emphatic end to the All Blacks 20 match unbeaten run. With England seeded in the second tier and Wales in the third having once again thrown a game away in the last minutes, this time against Australia, it should make today’s 2015 World Cup draw more than a tad interesting.
Have a good week out there.
Interbank Rates at 08:45 BST
Today’s Data: BST
09.30-UK – Manufacturing PMI
15.00-US – Construction Spending./.ISM Manufacturing Index
03.30-AU – RBA Interest Rate decision
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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
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