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.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

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

Currency Pair

Current

Overnight

High Low
EUR/USD 1.2118 1.2139 1.2092
GBP/USD 1.5495 1.5537 1.5486
EUR/GBP 0.7819 0.7821 0.7804
GBP/EUR 1.2785 1.2816 1.2785
GBP/CHF 1.5355 1.5391 1.5354
GBP/AUD 1.5056 1.5133 1.5056
EUR/CHF 1.2009 1.2012 1.2007
GBP/HKD 12.0132 12.0458 12.0063
EUR/HKD 9.3963 9.4218 9.3682
GBP/ZAR 13.0887 13.1490 13.0566
USD/JPY 78.14 78.43 78.08
GBP/CZK 32.6883 32.8036 32.6266

Today’s Data: BST

09.30-UK – BBA Mortgage Approvals

13.45-US – Fed Chairman Bernanke speaks

15.00-US – Richmond Manufacturing Index

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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