Mike Paterson’s Daily Forex Brief
The Euro has come under further pressure as traders fear the fallout from a Greek national strike tomorrow and the results of the Spanish stress tests on Friday.
On top of those events come meetings between German Chancellor Merkel and ECB President Draghi today and IMF head Lagarde tomorrow.
And if that wasn’t enough to send the Eurozone bulls running for cover we learn that the ECB and Bundesbank both have their lawyers working overtime on whether the recent OMT bond buying programme has any legality.
EURUSD has been down to 1.2881 before rallying to 1.2953 only to find strong selling interest and heading back down to 1.2885, just ahead of decent technical support.
EURGBP has had a decent move lower to 0.7939 accelerating on the back of the single farm subsidy that Brussels has to pay to UK farmers. The deal is due to be done this Friday and is said to be worth around â‚¬3.5 billion. Caution should be exercised here though as month-end always brings the Bundesbank buying in EURGBP for the UK’s monthly EU payment.
I’ve expressed my surprise before on this situation when its arisen as to the inefficiencies of one EU department selling a bucket of Euros and the BUBA buying another load. Probably red tape and Chinese walls gone mad, but it’s plain daft surely not to be able to match the trades and save a lot of money. If anyone out there knows the precise reason I’d be delighted to hear!
Another factor in EURGBP’s fall this week thus far has been a bid in GBPUSD on the back of a delayed dividend payment due to be completed by a UK clearer which is GBP positive so overall the Pound is enjoying a decent little run.
Expect another scrappy day with ECB President Draghi speaking at 14.00 BST but little in the way of data either side of that.
On the sports front, golf fans are counting down to Friday’s start of the Ryder Cup in Chicago which is shaping up to be a real test in front of a fiery crowd and, as I was absent from your screens yesterday it would be remiss of me not to report this morning of a glorious 3 points earned by the Shrimpers on Saturday. The charge for the top is back on track!
Interbank Rates at 08:39 BST
Today’s Data: BST
09.30-UK – BBA Mortgage Approvals
14.00-US – ECB President Draghi speaks
15.00-US – CB Consumer Confidence
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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
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.