Euro wobbles on Merkel comment as EU summit looms

Mike Paterson’s daily Forex brief

Yesterday’s relative calm was given a jolt after reports of German Chancellor Merkel was alleged to have said there would be no shared liability for sovereign debt in Europe “in her lifetime” or “over her dead body” depending on your source.

EURUSD fell sharply to strong support lines at 1.2441 dragging every Euro pair lower with it but the wobble proved short lived as the usual sovereign name suspects began to Hoover up a few, and short-Euro players took the opportunity to bank a bit of profit in the absence of any other momentum.

We’ve since been back to 1.2509 but it’s all painfully slow and the sellers continue to appear on the rally as the EU summit starting tomorrow appears destined to deliver nothing of substance. Plenty of rhetoric about long term visions of banking and fiscal union but no apparent fixes on the table for what needs to be done now, if indeed anything can be.. And there’s the rub, maybe the can-kicking is all they have…………….

EURGBP had a look down at support around 0.7980 (GBPEUR up to 1.2531) but failed to break through but as in all the Euro pairs there seems to be plenty of sellers on the rallies in the two-way business I anticipated.

GBPUSD appears to have a few buyers still and the Pound was totally nonplussed by yesterday’s BOE testimony but we can expect it to all kick-off again soon enough.

Various bits of data today but not enough to cause any major moves so it’s back to the newswires for any fresh EU blabber, leaked, rumoured or otherwise.

Forex Update-The Economic Voice Limited

Andy Murray was rumoured to have been in for a tough game yesterday against Davydenko but he was in imperious form and dominated from the start, unlike my Essex cricket boys who got well and truly hammered by the Aussies. A good time had by all though I’m reliably told!

Stop Press: UK Mortgage approval figures just out came in at 30,238 down from 32,103 in April and lowest since April 2011.Net mortgage lending -£73 million in May versus +£516 million in April, the lowest on record. Ouch!……..More QE anyone?

Interbank Rates 08:48 BST

Today’s Data: BST

09.30-UK – BBA Mortgage Approvals

11.00-UK – CBI Distributive Trades Survey

13.30-US – Durable Goods

15.00- US- Pending Home Sales

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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 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.