Mike Paterson’s daily Forex brief

You will have all seen my updates yesterday following the interest rate decisions from the BOE and ECB so I will not dwell on those but the ECB's press conference once again set the cat amongst the proverbial as Mr Trichet, in his penultimate appearance as President, told us that the downside risks had increased and took a far more accommodative stance on monetary policy.

Not a hawkish tone in sight and enough in these times to trigger a Euro sell-off of some size. EURUSD fell through the 1.4000 support line and has since been to 1.3844 taking out a strong barrier option support at 1.3850 while EURGBP (triggered by large selling from a UK clearer just before the BOE announcement yesterday) finally came down through 0.8750 support, (GBPEUR resistance at 1.1430) and this morning has broken key support around 0.8700 (GBPEUR up through 1.1500).

It seems that the market has, for the time being a least, given up on the Euro and all the internal wranglings ensuing. In yesterday's ECB press conference Trichet was in ebullient yet angry form and gave short measure to the Bundesbank and others for failing to support the mechanisms that are in place. It was not the job of the ECB alone, he said, to prop up the Eurozone in times of adversity.

Later in the day we had Fed Chairman Bernanke declaring that the Fed "has a range of tools and is prepared to use them".and "will do it all it can to restore high rates of growth and employment" Talk, as they say, is cheap and the market was disappointed that he didn't give more clues for the next FOMC meeting in a fortnight. Later we had the unveiling of the latest jobs initiative from President Obama, at a cost of $450 billion, which will have to come from tax hikes no one can afford.

It's a slippery slope globally right now and let no one tell you otherwise.

Today should see the usual end of week squaring up, in more ways than one. And hey folks, it's G7 time again this weekend where rumours abound regarding co-ordinated intervention with the BOJ definitely set to lay out their stall to all and sundry. Should be an interesting Asian trading session on Sunday night……..

And finally, (never more true a use than now!) today I lay my father to rest. Also a cricket nut and MCC member he stacked up a fine knock of 90 before having to return to the pavilion for good. Regular readers over recent years will have seen my various nods to him and my friends will know that ours was not always a smooth running relationship (what is nowadays?) but he has been a huge influence on my life, for better and for worse, and I shall miss him, as indeed I hope will the many others who met him. He was a character for sure but one who tried to move Homo sapiens forward and the world needs his like. His chosen epitaph was simple and concise, “He tried". I for one can vouch for that.

I shall be at my desk until 11.30 then out all day. Please contact your rate providers directly from that time. They will be delighted to help as always.

Have a good week-end all, when we shall also remember the victims of 9/11…….

Today's Data:

Weekly Economic CalendarHERE

Interbank Rates as of 08.19 BST

Current Price

Overnight

High

Low

EUR/USD

1.3871

1.3937

1.3862

GBP/USD

1.5960

1.5992

1.5945

EUR/GBP

0.8696

0.8721

0.8695

GBP/EUR

1.1506

1.1515

1.3885

GBP/CHF

1.3943

1.3982

1.3680

GBP/AUD

1.5031

1.5107

1.5000

EUR/CHF

1.2119

1.2167

1.2106

GBP/HKD

12.3740

12.3990

12.3630

GBP/ZAR

11.4796

11.5290

11.4208

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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