Mike Paterson’s daily Forex brief

A very busy start to the day so far, and if it was a relatively quiet start to the year then we certainly had things stirred up yesterday with a series of Euro-negative news stories that sent the currency tumbling.

A combination of Spain needing at least € 50 billion for a further banks bailout plan, a poor rights issue by Italy’s Unicredit bank, a shortfall in take-up of the 10 year Bund auction and talk of the ECB having to buy Portuguese and Irish debt all helped to kick the Euro lower yesterday morning.

EURUSD fell easily through strong support lines around 1.3000 eventually basing at 1.2888 before rallying to 1.2947 last night only to be slapped down again this morning to break through a barrier-option support level at 1.2850.There is talk this morning that French names have been selling EURUSD heavily, possibly ahead of a down-grading (the agencies must give 12 hours notice before going public), and that Deutsche Bank needs to raise capital.

This renewed selling in the Euro is adding to the belief that any rally must now be sold and traders are needing little encouragement to do so across the board. EURGBP came tumbling down too yesterday as did EURAUD and EURJPY amongst the other major pairs.

EURGBP eventually broke down through the 0.8300 (GBPEUR 1.2048) option support level and then held at the next big line at 0.8285 (1.2070) that I’ve mentioned here previously and was the 12 month low. But the pressure simply became too much and we moved lower again to 0.8260 before rallying to 0.8290 only to fall again this morning.

This wave of selling helped GBPUSD find good support on the way down and the Pound generally has found itself stronger across the board as all eyes focus on the Euro.

FX Update

FX Update

The other story of note that gathered pace yesterday was the FX dealing activity of Kashya Hildebrand, wife of the SNB President prior to him lifting the EURCHF to a 1.2000 peg. Needless to say she sold a few Swiss Francs and took a tidy profit afterwards.Seems the more she is now trying to justify it the bigger the hole she is digging and this morning husband Phillip will hold a press conference to stop those wagging tongues.. Good luck with that seeing as though an SNB commissioned audit only helped to fan the flames after the whole story came to light following an employee of Bank Sarasin sold the dealing info to an arch- critic of Mr Hildebrand, thus proving once and for all that the Swiss banking secrecy laws are long gone and it seems the SNB President himself is now facing allegations over his own currency trades.

Never a dull moment in the wonderful world of Foreign Exchange and with a French bond auction this morning on top of data releases we can safely expect more of the same today. As I sign-off EURUSD is trading at 1.2830 just off its September 2010 lows of 1.2828……………

Today's Data:

09.30-UK- Services PMI

10.00-EU- Eurozone Industrial New Orders

13.15- US- ADP Non-Farm Employment Change

13.30-US- Weekly Jobless Claims

15.00-US- ISM Non-Manufacturing Index

Interbank Rates as of 08:50 BST

Current Price

Overnight

High

Low

EUR/USD

1.2879

1.2947

1.2848

GBP/USD

1.5588

1.5630

1.5559

EUR/GBP

0.8263

0.8290

0.8257

GBP/EUR

1.2100

1.2112

1.2060

GBP/CHF

1.4757

1.4765

1.4691

GBP/AUD

1.5145

1.5173

1.5050

EUR/CHF

1.2188

1.2197

1.2171

GBP/HKD

12.0853

12.1179

12.0628

EUR/HKD

9.9878

10.0480

9.9594

GBP/ZAR

12.7594

12.8668

12.6416

USD/JPY

76.77

76.83

76.65

GBP/CZK

3.1300

3.1442

3.1186

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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