Mike Paterson’s daily Forex brief

With traders still looking for clues we’ve had one this morning from Martin Weale, a member of the nine-strong BOE’s MPC that voted for QE2 last week who said: "There is quite a lot of scope for further quantitative easing. Before the purchases that we announced last week, the amount of government debt in the system was actually higher than it had been before the earlier bout, so there is quite a lot more that could be done.”

This has taken the gloss off the small rally that we’ve seen in the Pound in a more risk-on environment prevailing on Friday and in Asia. GBPUSD has capped at 1.5526 and dropped back to 1.5593 and EURGBP from dipping below 0.8600 (GBPEUR up through 1.1625) has risen sharply to test the 0.8650 (1.1560) pivot level I keep banging on about. So far it’s failed to breach and sits at 0.8640 (1.1574). Across the board the same is true (see rate table below) as the highs seen in Asian trading have been similarly capped.

EURUSD has good size sell interest at 1.3500 having broken up through the stop-loss selling around 1.3420 that I mentioned on Friday but then dipping below again in Asia but EURCHF remains well wanted despite not being able to breach strong technical resistance at 1.2435 for the second time. The Euro has also garnered support from comments from the Merkel/Sarkozy meeting that Germany and France are committed to a comprehensive response by the end of the month, involving recapitalisation of Europe’s banks, dealing with Greece and accelerating Eurozone economic co-ordination.  Hot air again maybe but it’s enough at the moment to keep traders happy and we saw EURUSD rally strongly from lows of 1.3353 just above strong technical support at 1.3340.

A better than expected Non-Farm Payrolls number on Friday was the trigger for the latest wave of optimism/blind hope but in the absence of any key data today we will look to the newswires for inspiration and direction.

Stocks and gold are consolidating with the FTSE first clawing its way back above 5360 on Friday only to be slapped down again 100 points before finding fresh purpose in line with the FX risk-on sentiment and we’re currently back at 5325. I still say trade from the short side but caution will be needed in the immediate term if we break 5370 and 5400. Gold is steady around $1650.

Stop Press! News just out that the EU/IMF/ECB Troika say that they will wrap up their Greek aid talks today and make a statement tomorrow. EURUSD has broken resistance at 1.3500 and EURGBP has risen to 0.8660 but tempered by GBPUSD climbing back above 1.5625.Talk of stop-loss buying on EURUSD above strong technical resistance at 1.3550 might accelerate the move but this could all be a case of buy rumour sell fact. Caution advised!

As indeed would be the case for me getting too carried away by the Shrimpers brilliant last minute efforts to secure a 3-1 victory away from home on Saturday but we’re still top of the table and I intend to enjoy that while it lasts!

Have a good week.

Today's Data:


Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08.38 BST

Current Price

Overnight

High

Low

EUR/USD

1.3481

1.3492

1.3353

GBP/USD

1.5593

1.5625

1.5527

EUR/GBP

0.8643

0.8650

0.8590

GBP/EUR

1.1566

1.1644

1.1560

GBP/CHF

1.4335

1.4455

1.4321

GBP/AUD

1.5826

1.5985

1.5825

EUR/CHF

1.2382

1.2437

1.2379

GBP/HKD

12.0893

12.1140

12.0380

GBP/ZAR

12.3047

12.4726

12.2750

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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