Mike Paterson’s daily Forex brief
We've been seeing some good two-way business this week as markets consolidate ahead of key interest rate/QE decisions starting this evening with the US Fed then tomorrow from the BOE and ECB.
Traders will be justifiably cautious rather than trying to second guess the central banks but the feeling remains that further stimulus is required from all three, it's just a question of how much and by what means.
EURUSD has been clinging to 1.2300 after the week's earlier rally to 1.2400 but was knocked back a little overnight on the back of the worst Chinese PMI for 8 months. GBPUSD has struggled to get back above 1.5700 but similarly has found support around the 1.5650 pivot area.
EURGBP has run into the usual month-end buying interest over the past couple of days and we've seen another run higher this morning as I type to 0.7867 ( GBPEUR down to 1.2715 ) on the back of some strong EURJPY buying. Overall the Pound has had a mixed time of it again, losing outÂ to the more favoured commodity based currencies such as Aussie $ and Rand but this has been negated a little overnight by the post Chinese PMI sell-off in those currencies.
Stocks and Gold continue to stay well supported as the threat of the money printing presses rolling into action again looms large across the global stage.
Data out this morning focusses on Manufacturing PMI for the Eurozone and UK but all eyes will be across the pond at the Fed's release at 19.15 BST.
Meanwhile in the UK the Olympics start to crank up but with the home performers struggling to deliver for the moment. The Chinese seem to be swathed in controversy, this time amidst accusations of throwing a badminton match, while in the pool US "veteran" Michael Phelps picked up his record-breaking 19th Olympic medal. The GB squad would settle for a couple of those of any colour right now……
I'm still away at present but will be back with another update on Friday.
Interbank Rates 08:00 BST
Today’s Data: BST
09.00-EU – Manufacturing PMI
09.30-UK – Manufacturing PMI
15.00-US – ISM Manufacturing Index
19.15-US – Interest Rate Decision / FOMC Statement
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 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.