Mike Paterson’s daily Forex brief

Difficult to know where to start and I'm sure you've heard most of it by now but we've seen 24 hours of mayhem as the Greek referendum gets scrapped (euro positive), talk that Papandreou will resign today after winning the confidence vote today to allow his party to save face (euro positive), amongst the not inconsiderable side dish of the ECB cutting interest rates by 0.25%, new boy Draghi dealing well with it all but being realistic about Eurozone recession chances (euro negative).

Add to all this the G20 ministers trying desperately to work on a damage limitation exercise by stating they will add to the IMF war chest and Boy Wonder Osborne still clinging to the claim that our money is not going to be spent helping Europe. Of course not George.

The IMF will also take a more active interest in monitoring the economies of Italy and Spain et al, while China has chipped in by claiming that their 9% growth rate is “a gift to the world". Err, right, please go to the back of the class along with Mr Osborne. Maybe your cash will come in very handy but artificially maintaining an extremely weak currency is not helping really guys.

Anyhow we've up and down like the proverbial working girl's undergarments but not really breaking into any new ranges as traders try to see the very dense wood from the towering trees. EURUSD has been down below 1.3700 after the ECB interest rate cut and reality check from President Draghi, but the markets were impressed by his press conference debut and honesty. We've since been mostly camped around 1.3800 after it became clear that the Greeks won't have the referendum but this story is not over by a long way with today's confidence vote the next hurdle.

GBPUSD has also been in volatile mode but fairly much in tandem with EURUSD so EURGBP has been in tight range still (see rate table below) while the Pound overall continues to trade as an afterthought to what is going on elsewhere.

The SNB's Danthine said the they remain ready to act to weaken the Swiss Franc and whilst the comment only had limited impact yesterday the 1.2125 support line on EURCHF that I've been banging on about, and bought for my own account, has this morning provided a nice platform once again and something stirs as we're now 100 points higher at 1.2230. See? I really don't make this stuff up! Watch out for the 1.2300 barrier option sell interest that we saw last week and major Euro deterioration again. Interim support now should be found at 1.2200 and 1.2180.

The BOJ said the rest of the G20 had no issues with its solo intervention so we can expect a bit more at some stage but probably more peacock-suiting first.

With the G20 seemingly taking a harder line than many had anticipated we've seen some confidence returning to the equity markets which has in turn becalmed the FX markets but we wait to see what the final communiqué includes and there's the little matter of US key Non-Farm Payrolls out at 12.30 GMT which may give Mr Obama cause to have a look at his own affairs rather than gloating over Europe's disarray.

It's been a long week eh? Enjoy your week-end.

And come on you mighty Shrimpers!

Today's Data:

Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08:38 BST

Current Price

Overnight

High

Low

EUR/USD

1.3798

1.3839

1.3786

GBP/USD

1.6002

1.6047

1.5993

EUR/GBP

0.8619

0.8638

0.8610

GBP/EUR

1.1596

1.1615

1.1576

GBP/CHF

1.1576

1.4198

1.4065

GBP/AUD

1.5414

1.5446

1.5358

EUR/CHF

1.2230

1.2238

1.2132

GBP/HKD

12.4063

12.4412

12.3993

EUR/HKD

10.6987

10.7113

10.6890

GBP/ZAR

12.5988

12.6730

12.5179

GBP/CZK

2.8944

2.9060

2.8850

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.

Comment Here!

comments