Mike Paterson’s daily Forex brief

Last night the US Federal Reserve left interest rates on hold as expected at 0% – 0.25% but extended Operation Twist (swapping short-term bonds for longer-term ones) until the end of the year.

The programme is worth $267 billion and designed to cut the long-term borrowing costs for business and household alike but falls short of QE3, which we can safely say is now being held in reserve for more critical times despite a gloomy forecast given by Fed Chairman Bernanke.

Market reaction has been muted but traders will start to price in further easing. EURUSD initially rose but capped at 1.2720 and is now back down around 1.2660 again after weaker than expected PMI data earlier. GBPUSD had a smaller rally but is still clinging to the 1.5700 level as I type having dipped lower overnight.

EURGBP continues to range-trade too and has moved back lower after failing to breach 0.8100 resistance ( GBPEUR 1.2345 support ) while elsewhere the Pound is little changed except higher against a weakening Yen.

Stronger than expected UK Retail Sales out just now have brought a few GBP buyers to the table.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

The Greeks appear to have formed a government of sorts and their first task will be to try and extend the bailout terms from two to four years.

Remaining data today includes US jobs and housing figures but little else to inspire much movement.

May as well get yourselves along to Royal Ascot as I’m sure many of you are anyhow, but take a brolly!

Longest day of the year and it feels like it already…….

Interbank Rates 08:46 BST

Currency Pair

Current

Overnight

High Low
EUR/USD 1.2657 1.2708 1.2643
GBP/USD 1.5700 1.5722 1.5657
EUR/GBP 0.8064 0.8092 0.8059
GBP/EUR 1.2400 1.2410 1.2356
GBP/CHF 1.4894 1.4904 1.4842
GBP/AUD 1.5445 1.5467 1.5394
EUR/CHF 1.2010 1.2015 1.2008
GBP/HKD 12.1722 12.1893 12.1388
EUR/HKD 9.8163 9.8642 9.7814
GBP/ZAR 12.9595 12.9958 12.8323
USD/JPY 79.69 79.75 79.38
GBP/CZK 31.6872 31.7819 31.5391

Today’s Data: BST

09.30-UK – Retail Sales

11.00-US – CBI Industrial Trends Orders

13.30-US – Weekly Jobless Claims

15.00-US – Existing Home Sales

17.00-EU – ECB President Draghi speaks

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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