Mike Paterson’s daily Forex brief

OK, so I hope you got the intended irony of my "Crisis, what crisis?" comment yesterday. After the brief rally yesterday morning we once again plunged into panic as reality kicked back in that the ECB's action to buy Italian and Spanish debt was little more than a short-term fix. And when the US markets opened, the floodgates opened further as I said they would. And now we're witnessing an escalation of unrest in the UK.


The troubles on the streets of London and other UK cities have been waiting to happen for a while as I have previously written about. I'm not going to go into a big discussion here about the cause and effect of such actions but it's a timely reminder that all is not good in the UK, for whatever reason you wish to associate with these anarchic actions. I am not condoning such activity, just stating fact.

The currency markets have shown little response at this time, pre-occupied as they are with a global meltdown elsewhere, but if these riots and lootings are to continue then the negative impact on GBP must surely be felt as investor confidence turns and heads elsewhere, if indeed it has been coming here at all. It's a timely reminder to Cameron and Co that the smug complacency that they have shown in recent weeks, as the wheels fall off elsewhere, has been at best misplaced and at worst damn foolish and ignorant. If they really didn't have a clue that the UK austerity package would not have some socio-economic payback then they do now and it's little wonder that they're all coming back from hols in a hurry for an emergency meeting this morning at 09.00.

The past 24 hours has been another wild and wacky time and we've seen the Euro under fire again losing much of its Sunday night gains before stabilising a little. EURUSD has fallen back sharply from its rally above 1.4400 and seen a fall to 1.4152 before finding the usual buyers. EURCHF has fallen to new record lows (stop me if you've heard this one before) as USDCHF also gets slapped to new lows dragging down with it GBPCHF as per usual.

The Pound, continues to present a mixed picture with GBPUSD essentially shadowing EURUSD in a 1.6200-1.6500 range with EURGBP once again closing above 0.8700 last night after another dip but heading lower again at the moment. GBPAUD and GBPZAR have also made further gains as those previously-overbought currencies continue to be sold off.

As stock markets fall further with the Dow coming down over 5% yesterday we're seeing good two-way business as bargain hunters (so they think) buy the dips and second-chance/last-chance sellers’ rush to sell any rallies. Blink and you miss it for sure. The price actions here are making those in the currency markets sometimes pedestrian by comparison.

Gold continues its current trend with new highs followed by a small sell-off (profit taking) then another surge higher. Yesterday we saw a new high of $1732 followed by a dip below $1700 before rocketing up to new highs of $1772 overnight and dipping to $1742 presently.

Come on class, keep up!

And today sees key UK data at 09.30 and 15.00 (see table below) while this evening we have the latest US interest rate decision at 19.15 BST….

Brace yourselves folks….

Today's Data:

Weekly Economic Calendar-HERE

Interbank Rates as of 08.09 GMT

Current Price

Overnight

High

Low

EUR/USD

1.4280

1.4280

1.4152

GBP/USD

1.6347

1.6395

1.6267

EUR/GBP

0.8708

0.8732

0.8675

GBP/EUR

1.1493

1.1527

1.1450

GBP/CHF

1.2339

1.2441

1.2181

GBP/AUD

1.6071

1.6396

1.5974

EUR/CHF

1.0717

1.0845

1.0602

GBP/HKD

12.6740

12.7110

12.6815

GBP/ZAR

11.3604

11.4965

11.6120

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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