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

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…….

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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