Mike Paterson’s daily Forex brief

Since I last reported on the BOE and ECB action yesterday we've seen some good consolidation in the Pound and Euro despite the accompanying doom and gloom rhetoric from BOE Governor Merv King and various luminaries from the ECB, EU, IMF, BBC, MCC, et al………

Seems like some action is better than no action and we've seen a return to risk-on sentiment producing rallies in EURUSD and GBPUSD amongst others to 1.3465 and 1.5550 respectively as stock markets also stage a decent recovery. Talk of decent size stop-losses above 1.3470 that might trigger a further acceleration but also a large option expiry today at 1.3400 which could also come into play if it needs to be forced below.

I'm hearing decent size offers appearing at 1.5550 again in GBPUSD unsurprisingly given that we traded down at 1.5270 yesterday immediately after the BOE news and this has put the brakes on a further move back below the 0.8650 pivot line in EURGBP (GBPEUR 1.1560) which I'm sure you're all familiar with by now!

Overall the Pound has held its own (see table below) after yesterday's post-BOE wobbles, particularly in the light of Moody’s downgrade of 12 UK banks and institutions overnight. The more severe downgrades mean that the ratings of around four of the UK’s building societies will now effectively be down to junk status. That could leave them facing higher borrowing costs at a time when trading conditions are already difficult, but the next few weeks/months will reveal just how effective the latest fix of QE will be. If it's just going to shore up the banks' capital ratios and not get on to the streets via the consumer then it will have been a complete waste of time and markets will judge the Pound accordingly.

I have to say I'm firmly in the camp of putting money into the consumers pocket directly and not via the banks (who frankly are taking the proverbial from the government and tax-payer), but whether that money would go back into the economy, hide under a mattress until the bogey-men have gone, or soak up domestic debt is highly debatable.

EURCHF continues to camp above 1.2300 in the anticipation of SNB rhetoric/action, and the BOJ left interest rates on hold and its own intervention powder dry for the moment.

Big highlight today will be the monthly Non-Farm Payroll report from the US AT 13.30. Always eagerly anticipated and never more so than today given all that's gone on and President Obama's attempts to deflect attention to Europe from his own highly fragile economic state.. Bad numbers today and we're going to see risk-off again, and some, in frenetic Friday action.

TGIF and all that, but this week isn't over by a long way but one thing should be certain and that's another 3 points for the mighty Shrimpers (my beloved Southend United FC for all you new readers!) currently sitting proudly at the top of League 2. Did someone mention there was an England game going on too?!!

Have a great week-end all. Wherever your passion takes you……………

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

1.3440

1.3465

1.3403

GBP/USD

1.5526

1.5554

1.5422

EUR/GBP

0.8653

0.8706

0.8645

GBP/EUR

1.1550

1.1568

1.1485

GBP/CHF

1.4288

1.4315

1.4183

GBP/AUD

1.5822

1.5874

1.5762

EUR/CHF

1.2369

1.2387

1.2335

GBP/HKD

12.0373

12.0558

11.9565

GBP/ZAR

12.3227

12.3680

12.2110

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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