Mike Paterson’s daily Forex brief

Up and down and up and down we go…..Not sure whether Chubby Checker would have had more of an idea of what’s going on out there right now but Let's Twist Again is an appropriate song title for sure. (With apologies to my younger readers who will be wondering which part of Planet Tharg I'm writing from!)

Risk-on, risk-off, and now risk-on again as EURUSD surges back, as I type, in a rush to 1.3666 from a low in Asia of 1.3519 and that after a high yesterday of 1.3685. Similarly GBPUSD is challenging 1.5700 again having been down to 1.5542 overnight and after a high of 1.5680 yesterday.

EURGBP is holding its own as end of month buying (the Bundesbank were reported to be a getting a few in ahead of tomorrow) works to negate the general selling interest and hence we're still stuck in an ever-tightening range, currently 0.8680 (GBPEUR 1.1520) to 0.8740 (1.1440). The Pound overall continues to offer a mixed bag (see rate table below) as spotlights remain elsewhere.

Traders continue to feed off any snippet of rhetoric (because that's all we're getting at the moment) and the contrasting comments of differing opinion from those in charge of getting us out of this mess merely add to the volatility. Everyone's joining in and our Foreign Minister Hague has called the Euro a "folly" and described the EZ debt crisis as "a burning building with no exits". Thanks for your help there Will. Next time come up with a more original metaphor or something just a teeny weeny bit more constructive.Oh and by the way, talking of metaphors, people in glass houses etc etc……

But hey as I've been saying here for ages, these are serious times and it's not going to get any better for a long while so bicker away you leaders of the free, and not so free, world and the rest of us will just try and make some sense of it all.

Finland yesterday approved the EFSF bailout plan as expected so attention will now focus on Berlin and the German vote around midday today..While it should be a yes the fallout out from dissenters will have an internal knock-on effect for Chancellor Merkel.

And the US chipped in last night too with Fed Chairman Bernanke painting a dismal picture of their economy causing markets to slide and finish on their lows.. Surely Mr Obama can't keep blaming the Eurozone for too much longer.

So as risk-off sentiment prevailed at the end of the session we saw Gold fall $70 to my pivot line around $1580 only to bounce back up with the rest of it to $1630. There was a time not so long ago when a $10 move in Gold was a notable event over days. Now we get that in minutes. Changing world eh……? Similarly stock markets closed on their lows but have bounced back a little this morning. I did say yesterday that the FTSE was looking heavy above 5300 and so it proved.

So expect more rabbits being caught in ever brightening headlights. Despite deep concerns over the EZ there are still our Asian buyers of Euros on the dips and we've seen them in again overnight but there is now growing concern also that China's soft-landing will be nothing of the sort. Now that really will be a bit of a problem as I've written about before…….

And finally, just hearing from market sources about good size sell-orders in GBPUSD between 1.5710-20 which has so far capped this rally at 1.5703. EURUSD seems to have found fresh sellers around 1.3680 again.

Up and down and up and down and……..

Today's Data:

Live Economic Calendar Powered by Forexpros – The Leading Financial Portal

Weekly Economic CalendarHERE

Interbank Rates as of 08.26 BST

Current Price








































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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 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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