Mike Paterson’s daily Forex brief
We’ve seen markets get the jitters after yesterday’s interest rate cuts from the ECB, and Peoples Bank Of China plus the additional Â£50 billion of QE from the Bank of England.
The ECB cut its main interest rate by 0.25% to a record low of 0.75% but also slashed deposit rates to 0% in a bid to keep funds moving round the system. The PBOC also cut interest rates by 0.25% in a surprise move that suggests all is not well with their economy and in so doing sent shockwaves around the globe. The Old Lady left rates on hold but increased QE by Â£50 billion up to Â£375 billion.
The ECB move, although widely expected, still sent the Euro into a tail spin and we’ve seen EURUSD fall to a low so far of 1.2366 where we’ve found a good amount of buying interest. Resistance now comes in at 1.2410. GBPUSD has fallen below 1.5500 briefly but similarly picked up a few bids as EURGBP comes under pressure to lows thus far of 0.7968 (GBPEUR up to 1.2551).
The US Dollar remains the currency of choice but a lot will hinge on today’s key Non-Farm Payroll and Unemployment Rate data due at 13.30 BST.
Stock markets have generally reacted well, as one would expect after interest rate cuts, but Gold has capped again as traders try to calculate the impact on commodities and their associated currencies.
Should be an explosive afternoon but this morning we can expect traders to keep their powder dry.
Keeping dry may be a problem for a lot of us in the UK as Andy Murray bids to become the first British male finalist in over 70 years and Lewis & Jensen fly the flag at Silverstone.
Have a great week-end though wherever you may be.
Interbank Rates 08:44 BST
Today’s Data: BST
09.30-UK – PPI Input/Output
11.00-EU – German Industrial Production
13.30-US – Non-Farm Payrolls / Unemployment Rate
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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.