Mike Paterson’s daily Forex brief
We’ve seen a day of relative consolidation but fears over the Eurozone persist as Spanish bond yields rise to new Euro-era highs and ratings agency Moody’s issued a negative warning on core member countries Germany, The Netherlands and Luxembourg, the first step towards a possible downgrade.
Moody’s cites the increased likelihood of a Greek exit and the need to provide more support for Spain whose 10 year bonds this morning have risen to new record highs of 7.569%, with Italian 10 year bonds till in dire territory at 6.43%. Weaker than expected German PMI has put paid to any further Euro rally for the moment as traders see little merit in taking further profits after the recent rapid fall.
EURUSD tried to get back above 1.2150 but failed on the gloomy news and has since been below 1.2100 again. EURGBP staged a strong rally yesterday to 0.7828 (GBPEUR down to 1.2775) but it too has stalled for the moment at least.
GBPUSD has found a few sellers ahead of the 1.5550 pivot line as the Pound trims back recent gains particularly versus the Aussie, Swiss and Yen.
Nothing much in the way of data today but this afternoon US Fed Chairman Bernanke is up to the rostrum again. Difficult to see where the next shove is going to come from though. EURUSD has buy orders down at 1.2050 for a large barrier option interest but good sell interest in the rallies as we’ve seen in the past 24 hours, and there’s hardly much to cheer about right now.
Which is the same for us England cricket fans after South Africa yesterday duly completed a proper thumping by an innings and 12 runs. Have England given false hope in the past two years or have we just been beaten by a very good Protean side? We’ll find out next week as the 3 match series moves to Headingley. In the meantime, ouch…….
Interbank Rates 08:50 BST
Today’s Data: BST
09.30-UK – BBA Mortgage Approvals
13.45-US – Fed Chairman Bernanke speaks
15.00-US – Richmond Manufacturing Index
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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.