Mike Paterson’s daily Forex brief
Happy St. David’s Day to all our Welsh readers including our esteemed EV editors!
They say if you wish for something long enough then your dreams will come true. Well, I’ve been banging on for a few days about how quiet and boring these markets are and hoped yesterday that there were two potential impact moments. And one of them certainly caused more than a ripple!
While the ECB’s 3-year LTRO auction didn’t exactly set the markets ablaze, coming in at a take-up of €529 billion versus my forecast of € 525 billion, Fed Chairman Ben Bernanke surprised the markets in yesterday’s testimony by indicating that, given recent improved data, there might not be a need to introduce any further monetary easing after all.
This caused a rush to cover short-USD positions including a rapid sell-off on Gold which fell by $60 in moments and then further again to eventually find a base $100 off of the 24 hour highs. Feast or famine in these markets and yesterday showed that you can never get complacent.
EURUSD fell quickly down through strong support lines at 1.3400-10 to 1.3345 and then in Asia fell further to 1.3304 before finding a few buyers. The Euro gave up a lot of its recent gains across the board as traders unwound other positions and we’ve seen EURGBP down to key support around 0.8360 (GBPEUR up to 1.1963) from yesterday’s highs of 0.8455.
This rapid fall in the pair gave support to GBPUSD which softened the USD buying impact and as a result the Pound has fared well generally.
Forex Update
So far this morning it’s been a bit quiet again understandably as traders try to assess the real scenario after yesterday’s knee-jerk clear out, but with a fair amount of US data out this afternoon and Bernanke giving part 2 of his testimony we can expect a lively session before the day is out.
And finally, because it is indeed thus, a mention of the passing to that great gig in the sky of Davy Jones, Monkees frontman and erstwhile cheeky chappie. Those of us of a certain age will remember hours of fun in front of the TV watching their madcap antics backed by some top tunes from the likes of Neil Diamond (I’m a Believer). In these days of manufactured pop stars and boy bands these guys were undoubtedly the first and arguably the most influential. Rest well Davy on that Last Train to Clarkesville…….
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