Mike Paterson’s Daily Forex Brief

The major pairs have been sticking to their expected ranges again as German Chancellor Merkel arrives in China and central bankers arrive in Jackson Hole for tomorrow’s summit.

EURUSD capped at 1.2576, just ahead of the 1.2580-1.2600 sell interest I mentioned and we’ve been back down to 1.2523. Early positive sound bites though from Chinese Premier Wen have prevented any further falls and we’re heading higher again as I type as Wen pledges to keep buying European bonds and announces a contract to buy 50 Airbus family aircraft in a deal worth $3.5 billion.

It’s going to take a bit more than that to save the Eurozone but it’s a positive start to Merkel’s second trip to China in seven months thus highlighting the importance of their relationship. Germany is China's top trade partner in the EU with nearly half of all European exports to China coming from Germany. Meanwhile, nearly a quarter of all EU imports from China land in Germany. Bilateral trade between the two powers reached $169 billion in 2011, an 18.9-% rise on the previous year.

EURGBP also had the move higher that I called yesterday and it too stopped just shy of the key 0.7960 (1.2563) area that I highlighted, capping at 0.7956. See, I really don’t make these numbers up! We’ve been back down to test support around 0.7905 again but since rallied on the Euro-positive news this morning and currently sits at 0.7928 (1.2613).

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

GBPUSD too has found itself in an ever-tightening range with the sellers around 1.5860 proving one step too far on any rally but the buyers around 1.5810 seem happy to wait for their chance too. Expect more of the same today.

But we won’t be getting any more of the same from England’s cricket captain Andrew Strauss who yesterday duly announced his retirement from all forms of cricket. After 100 Tests- 50 as skipper- Strauss finished with a record of 24 wins, including back to back Ashes victories, making him England’s second most successful captain of all time behind Michael Vaughan. I’ve criticized Strauss over the years for some awful cricketing and man-management naivety but there’s no doubt he’s earned his place in England’s hall of fame and created a formidable team with coach Andy Flower.

And talking of formidable, it’s Day 1 of the Paralympics. Be inspired!!

Interbank Rates at 08:54 BST

Currency Pair





EUR/USD 1.2527 1.2562 1.2523
GBP/USD 1.5828 1.5842 1.5820
EUR/GBP 0.7930 0.7932 0.7912
GBP/EUR 1.2607 1.2640 1.2604
GBP/CHF 1.5143 1.5180 1.5140
GBP/AUD 1.5320 1.5343 1.5285
EUR/CHF 1.2008 1.2013 1.2007
GBP/HKD 12.2714 12.2823 12.2652
EUR/HKD 9.7337 9.7447 9.7034
GBP/ZAR 13.3442 13.3735 13.2729
USD/JPY 78.62 78.76 78.59
GBP/CZK 31.4265 31.5046 31.2370

Today’s Data: BST

09.30-UK – M4 Money Supply / Mortgage Lending / Net Lending to Individuals

13.30-US – Weekly Jobless Claims / Personal Income / Personal Spending

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.

Comment Here!