Mike Paterson’s daily Forex brief

Continuing themes in the last 24 hours with a risk-off sentiment still prevailing as traders concede to recurring negative rhetoric and data.

EURUSD failed to get up through those sellers at 1.3550 that I mentioned yesterday and we’ve seen new lows on this run at 1.3421 before some Asian sovereign buying again. Quite where this pair would be now if we didn’t keep seeing this natural demand for Euros remains a point of conjecture but it also has to be said that in recent times these same buyers have been more than happy to use their clout to sell in the rallies and take some profit. If the powers that be in the UK, US and Europe talk about curbing commercial banks involved in non-essential activities then surely these Asian central banks flagrantly “jobbing” the market in large amounts purely for profit can surely not be deemed essential.

The Euro has also picked up a bit more support this morning as reports filter in of the SNB checking forward rates in EURCHF and GBPCHF. This has lifted both pairs in rapid time after coming off yesterday and we now wait to see whether the SNB get involved or just remain happy to talk their book. In which case we shall probably fall back a little as traders take a quick profit before looking to book long positions again lower down.

The Pound has had mixed blessings after yesterday’s awful unemployment data and the subsequent BOE Quarterly Report from our newly knighted Governor, Sir Mervyn King. Both performances gave little comfort to those who still believe it’s only a matter of time before all is well again. It might indeed be, but not before taking a lot more casualties first. And that’s even if the Eurozone avoids further or complete meltdown. Sir Mervyn warned of a second credit crunch but was also, disappointingly, quick to join the current “ we’re only in this position because of the Eurozone debt crisis” mantra being wheeled out by the Government at every opportunity, the latest being an excuse for yesterday’s rising unemployment data. The latest UK consumer confidence figures have come in overnight at record lows so it would appear that there are at least a growing number of people out there not falling for these excuses and bracing themselves for the tough road ahead.

In line with the general risk-averse, i.e. bearish, scenario GBPUSD has fallen to 1.5689 before recovering on the back of EURUSD meaning that EURGBP has been a non-player in tight ranges of 0.8545-0.8578 (GBPEUR 1.1657-1.1703). Elsewhere though the Pound has mostly recovered from yesterday’s sell-off as other currencies continue to weaken further at this time, but it’s still finding plenty of sellers in the rallies, (see rate table below).

More data out today including UK Retail Sales shortly and then plenty from the US later to keep us on our toes even if it doesn’t offer any more clues.

Daily Forex Brief2

Daily Forex Brief

But finally, I’d like to note the sad passing of a great songwriter and genuinely nice guy, Jackie Leven, who has this week died of prostate cancer. I had the pleasure and privilege of meeting him last year and can honestly say I have not, in many a year, been so impressed by the warmth, humility and intelligence in a fellow human being, born out of a colourful and often painful life. The name will probably not be familiar to many of you but do yourselves a favour and check out http://www.jackieleven.co.uk I guarantee that you’ll not be disappointed.

That’s my one sure-fire forecast for the day      .

Today's Data:

09.30-UK- Retail Sales

13.30-US- Building Permits/Housing Starts/Weekly Jobless Claims

14.45-US- Bloomberg Consumer Confidence

15.00-US- Philadelphia Fed Manufacturing Index

Weekly Economic CalendarHERE

Interbank Rates as of 08:24 BST

Current Price

Overnight

High

Low

EUR/USD

1.3477

1.3519

1.3421

GBP/USD

1.5741

1.5766

1.5689

EUR/GBP

0.8559

0.8578

0.8545

GBP/EUR

1.1682

1.1703

1.1657

GBP/CHF

1.4510

1.4542

1.4452

GBP/AUD

1.5615

1.5668

1.5559

EUR/CHF

1.2427

1.2442

1.2366

GBP/HKD

12.2040

12.2233

12.1637

EUR/HKD

10.4468

10.4850

10.3936

GBP/ZAR

12.8690

12.9121

12.7591

USD/JPY

76.93

77.11

76.91

GBP/CZK

2.9954

3.0170

2.9903

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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