Mike Paterson’s Daily Forex Brief

The BOE and ECB yesterday left interest rates and QE unchanged as expected, but the ECB press conference delivered the bombs I always warn about, this time bringing the news that the decision was unanimous and effectively dismissing rate cuts any time soon, if ever.

Cue the Euro surge following some decent consolidation already in the session and EURUSD has so far been up to 1.3280 and EURGBP keeping pace with gains up to 0.8223 (GBPEUR down to 1.2158) as I type.

EURGBP is now testing highs last seen in December and the next target may well be the April highs of 0.8277 (1.2080) from where we began the fall all the way below 78.00 in July. From weeks of trading in a vacuum we could be unleashing the beast once again, especially as concerns over the UK re-surface as I believe they will.

EURJPY has also taken off, exacerbated by more general Yen weakness as the Japanese Cabinet approved the emergency stimulus package with more to come this year. The pair has flown up to 118.60 in Asia but since fallen back to 118.00 in line with USDJPY coming back off its highs of 89.35.

So we got the fun n games eventually and it proves that on interest rate day it’s never over till Super Mario spouts forth.

GBPUSD has lagged behind given the EURGBP rally and we’ve seen plenty of sellers emerge around 1.6180 and now fallen back to 1.6120 on the news just out that Industrial Production came in far lower than expected. Next major support line comes in at 1.6080.

It’s Friday and we know it can get a bit thin and lively so the big question to be answered today is whether we see this Euro positive mode continue or we see a bit of retracement as traders trim back ahead of the week-end. US Trade data at 13.30 GMT may have a say in that

England are currently going well at 286-4 from 47 overs in the first ODI v India after a couple of poor warm-up shows, while the mighty Shrimpers return to league action tomorrow needing to pick themselves up after the festive season losses.

And my secret sin that is the BDO World Darts Championship comes to a thrilling close this week-end. Not quite sure what makes it compelling viewing, but essentially it’s as gladiatorial as any other 1-to-1 sport out there combined with a backdrop/audience bordering on pantomime appropriately enough for this time of year. Are you ready for darts??!!

Have a great week-end all.

MSPFX forex website

Interbank Rates at 08:48 BST

Currency Pair

Rates

EURUSD 1.3263
GBPUSD 1.6147
EURGBP 0.8213
GBPEUR 1.2172
GBPCHF 1.4805
GBPAUD 1.5278
EURCHF 1.2161
GBPHKD 12.5187
EURHKD 10.2848
GBPZAR 14.0057
USDJPY 88.98
GBPCZK 31.2355

Today’s Data: BST

09.30-UK – Industrial Production

13.30-US – Import Price Index / Trade Balance

15.00-UK – NIESR GDP Estimate

19.00-US – Federal Budget 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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