Mike Paterson’s daily Forex brief

Apologies for late posting of this but a combination of laptop gremlins and a lively start to the morning combined to kick off a new week slightly behind schedule.

So what's been going on? Well, as fears remain over Eurozone contagion and the impact on the global economy, coupled with continuing concerns over Chinese slowdown, we've seen further risk-off sentiment with stock markets falling again, EURUSD falling to its lowest levels since January and commodity currencies once again being slapped.

Overnight in Asia EURUSD traded down to 1.3313 as local stock markets fell again, which I hope will come as no surprise to my regular readers (or even those who just tuned in Friday!) continuing a move started on Friday and accelerated by a large order to sell EURGBP that I mentioned in my update.

Turns out it was the EU farmer’s subsidy payments to the UK and handled by a UK clearing bank. So on the one hand we had the Bundesbank converting our monthly EU payment from GBP to EU and somewhere else in Euroland someone else sending an instruction to deal the other side. Left hand-right hand madness in my humble opinion and Euro red-tape gone made. Have they never heard of matching? The money they will have saved by not paying the market spread on billions of Euros (estimated at three billion this time) would have been significant and in these times of austerity it's a very shoddy bit of housekeeping at best….And if Chinese walls forbid the two departments to discuss their requirements then that's just plain daft too. If anyone can enlighten me here I'd be delighted to hear from you.

So EURGBP came down through strong support at 0.8600 on Friday (GBPEUR up to 1.1627) and overnight we went close to the next key support at 0.8550 (GBPEUR resistance 1.1695) before bouncing back to 0.8600 again this morning.

GBPUSD dipped below 1.5500 as EURUSD got sold off in Asia but bounced back and overall the Pound continues to fare well against the ever weakening commodity currencies. AUDUSD fell to its lowest levels in over a year forcing GBPAUD back up through 1.6150.

Just hearing a fat finger on the interbank dealing platform sent GBPUSD lower after the Manufacturing PMI data out just now and this sent it back to 1.5520 from a 1.5586 rebound high.

Gold remains in consolidation mode above $1625 but still not making any dramatic advances following the recent clear out while the other safe–haven, Swiss Francs, continues to attract little interest for fear of further SNB intervention. Seems like the Yen continues to be the current safe-haven favourite, which won't please the BOJ and should at some stage prompt some intervention action.

Little real data of note today but we do have a meeting of Eurozone finance ministers (yes, another one, and I doubt they're travelling economy class or staying at Mrs Miggins' B&B…) and the Troika discussions continue to find a solution to helping Greece..

Good luck with that one then and we can expect plenty of puffing of cheeks and pontification before the day is out…..

Today's Data:


Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08.48 BST

Current Price

Overnight

High

Low

EUR/USD

1.3368

1.3390

1.3313

GBP/USD

1.5545

1.5586

1.5483

EUR/GBP

0.8602

0.8634

0.8564

GBP/EUR

1.1626

1.1678

1.1581

GBP/CHF

1.4134

1.4187

1.4083

GBP/AUD

1.6102

1.6190

1.6041

EUR/CHF

1.2148

1.2168

1.2127

GBP/HKD

12.0520

12.0837

12.0040

GBP/ZAR

12.5460

12.7023

12.4901

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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