Mike Paterson’s Daily Forex Brief
Spain yesterday duly delivered its much anticipated austerity budget for 2013, which did little to inspire the markets but then comments by Finance Minister Guindos, hinting at an imminent official bail-out request, gave traders renewed hope.
The austerity budget seems to have satisfied the Eurocrats in going beyond expectations but will do little to quell the unrest amongst the massesWith PM Rajoy’s attention firmly on saving his own skin ahead of forthcoming elections it’s unlikely the bailout request will happen before that, but the markets seem to factoring in some positives as and when it does finally come.
EURUSD fell on the budget news and dipped to 1.2820 before Guindos’ comments caused a sharp rally and we’ve seen the pair up to 1.2943 so far.
EURGBP had previously seen a sharp move down to 0.7923 (GBPEUR 1.2621) with talk of a UK clearing bank selling a chunk of â‚¬500 million, possibly to do with today’s widely-touted farm subsidy deal at the 13.15 BST fix. The move was short-lived however as month-end buyers and profit-takers came in and we’ve seen a rally back to 0.7968 (1.2550) as I type.
GBPUSD moved back up when the risk-on appetite returned but struggled to keep pace with EURUSD and although clearing out a few sellers around 1.6230 and 1.6260 we’ve capped so far at 1.6273. Overall the Pound is little changed.
Also enjoying the risk-on rally were Gold and stocks with the shiny stuff reaching new recent highs ofÂ $1,782 but today sees the release of the latest stress tests on Spanish banks, the French austerity package and a plethora of US data this afternoon so we can expect a lively end to the week.
Get your orders in!
Meanwhile in the wonderful world of sport, England’s cricketers failed to get past the West Indies with another lacklustre performance, John Terry was found guilty by the FA of racial abuse, and Lewis Hamilton has run out of patience with Maclaren and will move to Mercedes in a widely anticipated move.
Today sees the start of the eagerly awaited 2012 Ryder Cup with Europe looking to defend the trophy at the Medinah Country Club in Chicago, and of course tomorrow the mighty Shrimpers are back on the points trail in the slightly less exotic but equally historic location of Plymouth.
Have a great week-end wherever it takes you.
Interbank Rates at 08:32 BST
Today’s Data: BST
09.30-UK – Index of Services
10.00-EU – Eurozone CPI
13.30-US – PCE Price Index
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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 firstname.lastname@example.org
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.