Eurozone prepares for Greek exit and the Germans give a thumbs-down to austerity

Mike Paterson’s daily Forex brief

It seems like the Eurozone is bracing itself for the Greeks pulling out after their failure over the week-end to put together a government and Syriza has ruled out forming a coalition with the pro-bailout parties. They are due to meet with the President today but the portents aren’t good.

Add to that the fact that German Chancellor Angela Merkel's party suffered a severe defeat yesterday in a pivotal German state vote likely to award her main rivals a major boost in their bid to soften her austerity drive in Europe. And she now has a new French President to contend with too who is less disposed to nuzzle up.

Mix in a bit of street protest in Spain at the 25% unemployment rate and we’ve seen the Euro fall again with particular selling in EURJPY forcing EURUSD below 1.2900 and now challenging decent support at 1.2850.

EURGBP has found sellers on the rally again but has yet to re-test 0.8000 although it appears only a matter of time, while elsewhere the Pound continues to benefit from its re-claimed safe haven status, until the proverbial hits the fan at least. GBPAUD is climbing through 1.6100 as I type on talk of further Aussie interest rate cuts and AUDUSD falling below 1.00 again and GBPZAR continues its upward march as metal prices continue to look soft.

GBPUSD however is dipping as the US Dollar dominates proceedings and is now testing strong support around 1.6050. The

Forex Update-The Economic Voice Limited

BOE to expected to signal interest rates on hold through 2013 in its Quarterly Inflation Report on Wednesday with one eye on inflation while cutting growth forecasts.

Little in the way of data today but focus will remain firmly fixed on Greece and the Eurozone and those all important bond yields.

Congrats to ManCinity who proved that money can eventually buy success despite pushing the self-destruct buttons on more than one occasion and here’s hoping the Shrimpers can overturn a 0-1 deficit in the second leg to make it to the Wembley play-offs.

Have a good week everyone.

Interbank Rates  08.22   BST

Today’s Data: BST

10.00-EU- Eurozone Industrial Production

16.45-CH- SNB Chairman Jordan speaks

02.30-AU- RBA Minutes

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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.