Mike Paterson’s daily Forex brief

Rumours that Berlusconi was to resign yesterday lifted the Euro and the equity markets shortly after I finished writing, but he denied he was going and we’ll have to wait until this afternoon to see if he’ll be forced out after the budget confidence vote.

Either way the opposition party are going to have a tough time trying to sort out the mess if they do get in, so it’s hardly a time to rejoice or get optimistic about a solution. Looks to me like traders still remain desperate to cling onto any news/change of government as positive while Italian borrowing costs soar to a record high of 6.7%.

Meanwhile over in Greece the search continues for a new PM and we now have a few names in the ring (would take me ages to type them in full here!) with a decision probably due today.

The EFSF auction yesterday went down with less enthusiasm than the Eurocrats would have liked suggesting that investors are not so keen in loading up with too much Euro debt if they don’t have to. Looks like another chat with China is on the cards then.

And the Euro? Yep, it continues to shrug everything aside with EURUSD consolidating above 1.3750 at the moment as traders still think further QE from the US Fed is on the cards, thus making the USD less attractive on interest rate yield. But these are crazy days and what we might have once considered as rational explanation tends to get blown out the water on a whim. Sellers are lined up around 1.3800

Daily Forex Brief

Daily Forex Brief

The Pound is strengthening by default and we’ve seen GBPUSD hold above 1.6000 on the back of EURUSD but sellers are lining up around 1.6100-20 with bids on the books at 1.6040. GBPCHF marches higher as various SNB members keep talking down the Swiss Franc and we’ve seen EURCHF break up through 1.2450 only to fall back on profit-taking ahead of the recent rally high I mentioned of 1.2475.We have SNB’s Jordan and Chairman Hildebrand making speeches today and traders are now getting excited over an announcement being made to raise the floor to 1.30. Any failure to do so today should see quite a sharp reversal. Watch this space.

EURGBP has dropped a tad but continues in tight ranges. Talk that there is some selling interest due today may shake it up a little if we get through the 0.8550 support line I’ve been talking about.

Data just out shows UK Manufacturing and Industrial Production hardly registering on the scale but that’s as expected and the market has shown little reaction.

Another scrappy and potentially volatile day ahead.

Today's Data:

Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08:23 BST

Current Price

Overnight

High

Low

EUR/USD

1.3765

1.3778

1.3723

GBP/USD

1.6062

1.6078

1.6034

EUR/GBP

0.8570

0.8583

0.8556

GBP/EUR

1.1664

1.1688

1.1650

GBP/CHF

1.4490

1.4548

1.4437

GBP/AUD

1.5509

1.5547

1.5378

EUR/CHF

1.2430

1.2458

1.2389

GBP/HKD

12.4528

12.4652

12.4312

EUR/HKD

10.6707

10.6814

10.6522

GBP/ZAR

12.7261

12.8244

12.7135

USD/JPY

78.00

78.11

77.98

GBP/CZK

2.9328

2.9472

2.9240

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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