Mike Paterson’s Daily Forex Brief
Friday saw a continuing appetite for risk in thin markets and we’ve seen the Euro make extended gains while the Yen remains undermined as the LDP win a convincing election victory.
Nothing too special behind the general USD weakness but there was talk of a Republican compromise on tax hikes, which indeed was later announced and this just helped settle markets a little.
EURUSD had been well supported in the dips all week as I had reported and the pair finally broke up through the huge 1.3125 resistance, then the 1.3150 target and kept on going before finding 1.3200 a step too far for the moment.
EURGBP got dragged up in the cross-fire too and we’ve seen highs of 0.8155 (GBPEUR down to 1.2262) so far. Support now seen at 0.8120 and 0.8100. Sellers re-appear at 0.8160 and 0.8185.
GBPUSD also got a decent lift in the fickle Friday fayre and although we stalled at 1.6190 we’re seeing renewed buying interest this morning to take us up through 1.6200 as I type and targetting the 1.6220 highs seen in September. Stalling at 1.6201 and falling back now so maybe a step too far for the moment.
Overall the Pound fails to make any decent gains but is holding its own in a mash-up of pricing against most other currencies.
In Japan the LDP won the elections as expected and with a decent 325 seat/two-thirds majority. The immediate reaction was to see the Yen weaken off in a rush with USDJPY leading the way up to 84.48 but the move was widely anticipated and fell back quickly as traders took another chance to book some profit.
Monetary policy will continue to be loose and liquid and we should expect the Yen to weaken further with the knock-on effect felt across other currency pairs as frequently outlined here.
With only a week to go before traders hang their socks out for Santa we can expect markets to get thinner and thinner which means greater volatility. With month-end and year-end flows kicking in 2012 is far from over just yet.
England’s cricketer’s have batted out a 4th Test draw to take a glorious 2-1 series victory in India. The magnitude of this win cannot be under estimated and is testimony to what has been a terrific (for the most part) team effort. Top work fellas!
And top work too by the mighty Shrimpers who came back from 0-2 down to secure a last minute draw and a valuable point, not to mention continuing this fabulous unbeaten run.
Bradley Wiggins, the Modfather of sport, last night took the highly prized BBC Sports Personality of the Year Award by securing 30% of the public vote crammed into the now frantic 20 minute rush for the phone.. At least we don’t have to put up with a bunch of highly staged posing from a judging panel……..
Have a good week out there.
Interbank Rates at 08:48 BST
Today’s Data: BST
13.30-US – NY Empire State Manufacturing Index
14.00-US – TIC Net Long Term Transactions
14.30-US – ECB President Draghi speaks
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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 email@example.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.