Mike Paterson’s Daily Forex Brief
Yesterday I reported that we’d been going nowhere fast but that it was all starting to look soggy again and so it’s proved as traders give up on their recent bullish mood.
Concerns over the delay in Spain asking for their bail-out money, combined with a series of weak data, has forced the Euro lower as long positions are liquidated through key support levels.
EURUSD had support at 1.3000 and I said yesterday that we should see things liven up if we could break through and eventually we did, stopping first at 1.2950 before rallying again to 1.2997 in Asia. However, weak PMI and IFO data for Germany and the Eurozone just out this morning has sent it plummeting again to 1.2935 as I type.
EURGBP had been heading lower in any case due to an early buyer around in GBPUSD, and we’ve now come down to test strong support in the 0.8100-10 level.(GBPEUR up to 1.2335)
It’s a similar story all round for the Euro and you’ve got to wonder what all the excitement was last week, but when we trade in tight ranges it’s easy to get these swings as traders have less tolerance for holding positions.
BOE Governor King last night told us that there’s little more they can offer to help stimulate growth and re-iterated that it was down to the banks to make the most of the Funding for Lending initiative to re-capitalize. Without that in place and the acceptance that bad debt would have to be written off , he said, there was little chance that the banks would start to lend and hence increase the chances of growth.
His comments were aimed globally but we saw GBPUSD accelerate lower to 1.5950 having already broken down through the 1.5990 support I’ve been banging on about.. Lows so far of 1.5935 in Asia but that earlier buyer has given it some decent support although we’re still only around 1.5960 having tried to get back up through 1.6000.
Stock markets have been heading lower again and Gold has lost its lustre since we came back down through the $1,770 level I mentioned a couple of weeks ago. It’s currently at $1709 and analysts tell us it should be heading to next support at $1,665.
Some more data out later and ECB President Draghi is having a couple of trips to the rostrum so we’ll see if he can inject any confidence to markets rapidly losing faith again.
Talking of which, mine’s being sorely tested after the Shrimpers lost again to a late goal, this time to a team who hadn’t won in seven matches. Causes for concern but hey, early days!
And it was a mixed bag for our teams in Champions League action, while cyclist Mark Cavendish called for Lance Armstrong to confess to his doping crimes. Probably not a priority for him though given that he now, rightly enough, has to find around $10m in prize and bonus money to hand back. Ouch!
Interbank Rates at 08:45 BST
Today’s Data: BST
09.00-EU – Eurozone Manufacturing PMI / German Manufacturing PMI / German IFO Business Climate Index
11.00-UK – CBI Industrial Trends Orders
12.45-EU – ECB President Draghi speaks
15.00-US – New Home Sales
15.00-EU – ECB President Draghi speaks
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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 firstname.lastname@example.org
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.