Mike Paterson’s daily Forex brief
Friday’s US Non-Farm Payroll came in under expectations and it was enough to trigger another wave of risk-off trading with, ironically, the US dollar once again being the main benefactor.
The Euro was once again the biggest loser as the reality check on the Eurozone bailout measures continued to kick-in and Spanish bond yields continue to hover around the “unsustainable” 7% level.
EURUSD has traded down beneath 2-year lows to 1.2260 before picking up some profit-taking buyers. I did say on Friday that if we couldn’t get back above 1.2410 then we had to head lower still.
EURGBP also fell with GBPUSD lagging behind on the move and we’ve now seen a low of 0.7917 in Asia (GBPEUR up to 1.2631) after lows on Friday around 0.7940 (1.2593) which is where we’re back to now.
GBPUSD had some buyers earlier on talk that the Marriott hotel group is selling up to 42 hotels in the UK to Middle East buyers. We’ve had a rally back above 1.5500 but that has petered out as EURUSD comes under pressure again in early European trading.
Overall the Pound has found some strength as other currencies get slapped. So far the Libor fixing scandal seems to have made little impact but today the BOE Deputy Governor Paul Tucker appears before the Treasury Select Committee to give his version of events, and I still say there will be some fallout at some point. The markets knew the fixing was going on but there are still repercussions to be had even if attention is currently fixed elsewhere.
Gold and stocks are lower with the shiny stuff giving up on its recent rally above $1600 and falling back to $1576 while the FTSE has given up on its bid to break 5700 and is now below the 5650 pivot level this morning.
Little in the way of data today but we have ECB President Draghi speaking at 13.30 BST and overnight we get some occasionally influential UK data ( see table below ).
And the big week-end hopes of British sporting success proved as damp a squib as the appalling weather for Andy Murray and the F1 boys, but we say congrats to Men’s Doubles champ Jonathan Marray and the English cricket team for sealing a 3-0 series winning lead against the Aussies with an emphatic 8 wicket victory.
Have a good week out there.
Interbank Rates 08:43 BST
Today’s Data: BST
13.30-EU – ECB President Draghi speaks
00.01-UK – BRC Retail Sales Monitor / RICS House Price Balance
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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.