Mike Paterson’s daily Forex brief

Well, the latest G20 summit came and went and gave the markets little comfort that there is any likelihood of combined action to solve the Eurozone debt problems and assist the global economy through its murky waters.

Not that this is anything new from these meetings but these are desperate times and for once, just once, there was hope that the streams of rhetoric from the world's financial leaders, including the IMF and World Bank, might just lead to some positive action. Not that they've got too many tools at their disposal of course. 2008 was different, there was room to bring down interest rates but now at these levels the aforementioned leaders can only scratch their heads and hope for a miracle. Well, certainly the lack of any new initiatives would suggest this is the case.

So EURUSD, from a rally in early Asian trading to 1.3551on expectations of some form of action, has since fallen to 1.3362 (a strong technical support line) dragging with it most Euro pairs including EURGBP which has once again failed around 0.8750 (GBPEUR 1.1430) and fallen to the key support/pivot line at 0.8651 (1.1560) before rebounding to 0.8690 (1.1510) on a bounce back to 1.3440 on EURUSD with the usual Asian buyers on the dips and after a slightly better than expected German IFO number just now.

GBPUSD failed to breach 1.55OO on the EURUSD rally but has so far held its ground above 1.5400 resulting in a better performance for the Pound (see below) as other currencies remain in the direct line of fire. Commodities continue to fall on reduced expectations of global demand and this has seen GBPAUD breach 1.6000 for the first time in a while, only to fall back to 1.5933 as I type. GBPZAR however has failed to hold gains above the heady heights of 13.00.

GBPCHF is back above 1.40 as EURCHF continues to attract bids on the dips despite the general Euro weakness as traders remain convinced, or at least wary, of further SNB action.

Gold has plunged further after ACB's (Asian Central Banks) failed to show up with any conviction around $1,650 and in crazy stop-loss selling we've down to $1,532 in Asia before bouncing back to $1,584 eee $1,610 (!) as I type. The one-way ticket that was Gold has been cashed in, and some, over the past week as I repeatedly warned here. That's not to say we won't see $2,000 before we see $1,400 but short-term buyers have been burnt badly and this clear-out shows that even as a safe haven the shiny stuff still needs a reality check from time to time.

Stock markets have fared a little better in early trading after steep falls on Friday but I still say sell the rallies. This move has got a long way to run yet.

Little data out today but expect plenty of rhetoric. Already we've had two ECB members spouting forth on opposite sides to an interest rate cut which the market seems sure Trichet will effect in his last stand in a couple of weeks.

Sorry to sound like a one trick pony but it really is a complete mess out there with a Greek default of some measure being a certainty but with the consequences still remaining unclear. While the world tries to find a solution, rather than kicking cans down the road, this week can only add to that uncertainty.

Today's Data:


Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08.28 BST

Current Price

Overnight

High

Low

EUR/USD

1.3417

1.3551

1.3362

GBP/USD

1.5447

1.5495

1.5431

EUR/GBP

0.8690

0.8748

0.8651

GBP/EUR

1.1512

1.1560

1.1430

GBP/CHF

1.4054

1.4130

1.3979

GBP/AUD

1.5933

1.6063

1.5722

EUR/CHF

1.2210

1.2255

1.2174

GBP/HKD

11.9760

12.0140

11.9640

GBP/ZAR

12.7115

12.9208

12.4415

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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