Mike Paterson’s daily Forex brief

As concerns re-emerge over the US debt problems (almost $16 trillion worth in fact) the markets still can’t really fathom what to do with all the bad news from around the globe and so we continue to see little change, but with various currencies targeted as they pop up above the parapet.

A US congressional committee, the so called “super-committee”, tasked with reducing the deficit by $1.2 trillion (£762bn) has failed to come to an agreement and we can now expect this take a bigger chunk of the spotlight as I have warned before.

EURUSD found good support again around 1.3430 having looked soggy for much of the day and 1.3400-30 now becomes a real base. If we go below 1.3380 we can expect further acceleration but for the moment traders have been short-squeezed and we’ve seen a rally to 1.3550 where there is talk of good selling

Between there and 1.3580. Plenty of good two-way business so far today, albeit in volatile mode.

The sellers in GBPUSD that I mentioned yesterday have certainly put a dent in the Pound and have been seen again this morning on the rallies to 1.5690. Low overnight of 1.5619 is close to a key technical (Fibonacci) support line of 1.5613 so if 1.5600 gives way we will see a further down move for sure. This GBPUSD pressure has seen EURGBP finally break through the key 0.8600 resistance (GBPEUR 1.1628 support) that I’ve been talking about for a while and we’ve now seen the expected acceleration to 0.8660 (1.1547) with further stop-loss buying once 0.8650 was triggered earlier on this morning. Talk of sovereign names being large buyers of this pair in the last 24 hours.

Daily Forex Brief2

Daily Fx Brief

The think-tank Reform have also warned of UK austerity for a further 10 years saying that there is no quick fix to the UK’s problems and urges that the spending cuts continue. They said "austerity is the new normal", and stressed that the Government "must avoid the temptations of quick fixes and inconsistency" if it is to attract the business investment that will eventually bring some good news.

The continuing global uncertainty means that equity markets are struggling to bounce back after recent falls but we’ve also seen a further substantial fall in Gold to $1668, (now $1692) as holders of long positions bail out following the failure to hold above $1800 on the recent rally. A scenario I have warned about in these columns.

Lots more rhetoric hitting the wires and we have a few more people standing up to speak today including the SNB Chairman Hildebrand at 10.45 GMT , and then we have the latest provisional GDP figures from the US at 13.30.

Another scrappy day ahead.

Today's Data:

09.30-UK- PSNBR

13.30-US- GDP (provisional)

15.00-US- Richmond Manufacturing Index

19.00-US- FOMC Meeting Minutes

Weekly Economic CalendarHERE

Interbank Rates as of 08:38 BST

Current Price

Overnight

High

Low

EUR/USD

1.3530

1.3555

1.3469

GBP/USD

1.5650

1.5693

1.5617

EUR/GBP

0.8644

0.8651

0.8617

GBP/EUR

1.1567

1.1606

1.1558

GBP/CHF

1.4290

1.4365

1.4277

GBP/AUD

1.5863

1.5918

1.5824

EUR/CHF

1.2352

1.2389

1.2343

GBP/HKD

12.1334

12.1667

12.1078

EUR/HKD

10.4896

10.5354

10.4328

GBP/ZAR

12.9933

13.0718

12.9467

USD/JPY

76.92

77.34

76.86

GBP/CZK

2.9489

2.9763

2.9469

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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