Mike Paterson’s daily Forex brief
I spoke yesterday about the trader mentality and the need for feeding frenzies. Yesterday we had a Euro wobble on the Irish EU treaty referendum news and, for what it’s worth, today carries two potential visits to the trough.
The first is the ECB’s 3 year LTRO auction this morning at 10.15 GMT where the market is now expecting a take-up of around â‚¬ 525 billion compared to previous forecasts of â‚¬450 billion. The second comes this afternoon at 15.00 GMT when US Fed Chairman Bernanke testifies to the House Financial Services Committee. It’s probably fair to assume that Mr B will say that he’s willing and able to throw some more money at the economy if needed, but the main focus will be on his emphasis on investment weakness versus the recent improved jobs data.
This is all following on from Ireland’s decision yesterday to hold a referendum on the EU’s fiscal treaty deeming it necessary under constitutional law. Given the reaction to the Greek’s desire to hold one previously this move from the Irish isn’t going to go down well amongst fellow EZ countries, and while the three main Irish parties all back the treaty it’s a fair assumption that the people on the street will not be so inclined to agree. After all, they voted No to both the Nice and Lisbon treaties before being made to vote again, but this time the Irish government have ruled out a second vote.
Anyhow, right now we have very sleepy markets with EURUSD still unable to get through 1.3500 but holding above 1.3400 after yesterday’s dip, while GBPUSD has broken up through 1.5900 but struggling to make further headway. EURGBP is a tad softer again at 0.8455 (GBPEUR 1.1827) despite the month-end buying interest. Overall the Pound is going nowhere fast.
First up this morning is UK lending data due shortly and then Eurozone CPI at 10.00 GMT.
Could be a long but altogether more interesting day. Let’s hope so at least……….
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