Mike Paterson’s daily Forex brief

Markets had another case of the jitters in late NY trading when US banking giant JP Morgan announced $2 billion losses on its “synthetic” credit derivatives trading, which is a bit careless in any trader’s book (pun intended). This caused US stocks to tumble just before the close and tipped into Asia and Europe.

Synthetic credit products are derivatives that generate gains and losses tied to credit performance without the owner buying or selling actual debt. The losses occurred as the company sought to unwind a portfolio of the instruments used to hedge JPMorgan’s credit exposure.

Has it caused much of a dent in the US Dollar? Nope, not really as it’s just added to the general risk-off sentiment although this morning we’ve seen EURUSD head back up off its overnight lows around 1.2900 to so far test 1.2960 resistance. EURGBP had a dip below 0.8000 but no follow-through and we’re back up to 0.8034 (GBPEUR down to 1.2441) as I type in line with the general Euro buying interest and weaker than expected UK PPI out earlier.

GBPUSD has therefore failed to make any headway. In fact failed to go anywhere really but GBPAUD is once again back above 1.6000 and GBPZAR up through 13.00 for the first time in a while as commodity currencies get another bashing on the current poor showing of Gold and other metals.

Not much by way of data to come so we’ll just expect the usual frantic Friday fare with traders looking to square a few positions while keeping ears and eyes firmly on the lookout for any potholes.

On the football front I see they’re testing goal-line technology down at Southampton with Hawkeye emerging as the front runner as opposed to a micro-chipped ball, with a decision due on July 2. Not before time but any implementation will still probably only be financially viable for the top clubs so that will create a bit of a misnomer in itself. But hey, a work nearing completion we can only hope.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

Similarly hoping that the mighty Shrimpers can get a result from their first leg League 2 play-off game tomorrow and talking of results Roy Hodgson is attempting to get one this week-end by getting John Terry and Rio Ferdinand to kiss and make up. Er, good luck with that one Roy!

Have a great week-end everyone and, yes enjoy the sun!

Today’s Data:

09.30-UK- PPI Input / Output

13.30-US- PPI

14.55-US- Michigan Consumer Sentiment

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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