Mike Paterson’s daily Forex brief

As the cracks appear in Friday’s, perhaps hasty, EU agreement and reality sets in we’ve seen more pressure on the Euro and markets in general.

There definitely seems to be mood around that whilst the measures could do something to restore market confidence the practicalities of application may yet prove that the effect is limited.

EURUSD had a little rally above 1.3400 but has since only drifted lower (heading beneath the overnight lows as I type) and while some short positions have been covered there has definitely not been the rush to cover that we saw after the last EU summit. With the market still heavily weighted on the short side this may limit the speed of downward momentum and we will also see the usual Asian buying in the dips too, but the Euro undoubtedly feels heavy again.

EURGBP is lower but struggling to make real moves as the market digests the knock-on effect of the UK’s decision not to sign up to Friday’s agreement. There is no doubt now that it’s caused serious rifts both in the government and business community. Being outside the biggest market place we have is not a good place to be as I have oft said here and we can expect the Pound to struggle even if our decision has been likened by some commentators to not getting on board the Titanic.

FX Update

FX Update

Overall though the Pound is little changed at present with varying ups and downs (see rate table) with Middle East buyers in GBPUSD dips still but sellers in the rally around 1.5600.

EURCHF is also looking heavy again despite a strong feeling out there that the SNB will raise the peg at this Thursday’s meeting, thus proving how short of CHF traders currently are.

The market’s general bearish tone overall has seen further sell-offs in metals and equities and both silver and gold seem to be having end-of-year adjustments going on with Gold following Silver down, the former trading as low as $1676 before fin ding support.

Little in the way of data today so we’ll be focussing on more EU rhetoric, making it a scrappy start to the week.

Today's Data:

19.00- US- Federal Budget Balance

Interbank Rates as of 08:40 BST

Current Price

Overnight

High

Low

EUR/USD

1.3308

1.3387

1.3293

GBP/USD

1.5582

1.5674

1.5552

EUR/GBP

0.8541

0.8554

0.8527

GBP/EUR

1.1704

1.1728

1.1687

GBP/CHF

1.4436

1.4509

1.4427

GBP/AUD

1.5350

1.5388

1.5314

EUR/CHF

1.2332

1.2395

1.2332

GBP/HKD

12.0807

12.1520

12.0574

EUR/HKD

10.3218

10.3978

10.2808

GBP/ZAR

12.7177

12.7803

12.5792

USD/JPY

77.74

77.74

77.55

GBP/CZK

2.9792

2.9955

2.9579

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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