Mike Paterson’s daily Forex brief

Yesterday saw US Fed Chairman Ben Bernanke step up to the rostrum once more and give the markets every good reason to believe that the US will print their way out of trouble.

Bernanke said much of the improvement in the U.S. labour market since the summer of 2009, when the economy began emerging from the deepest recession in generations, was due to a decline in layoffs rather than a robust pickup in the number of employers taking on new workers. He added that the United States economy needs to grow more quickly if it is to produce enough jobs to bring down the unemployment rate. And this signal that QE3 was firmly back on the agenda was enough to send traders scurrying to get out of the US dollar.

EURUSD had looked soft during our morning trading but needed no excuse to have another pop at the big 1.3300 level once Bernanke had made his comments, and despite some good resistance as expected we’ve since been up to 1.3367 before capping out in Asia. I’m hearing talk now of more barrier option sellers at 1.3375 and 1.3400 with buy orders in place around 1.3315.

GBPUSD followed suit and we were soon taking out the large sellers around 1.5920 that I mentioned and we’ve been up to 1.5972 but for the moment any attack on 1.6000 will have to wait.

EURGBP has been very much an onlooker and has struggled to move anywhere and overall the Pound is a bit of mixed bag with a few gains and a few losses (see rate table). The “cash for access” problems surrounding PM Cameron seems to be having little impact at present but it’s a story that well de-stabilize the coalition and give overseas investors good pause for thought.

Forex Update-The Economic Voice Limited

Forex Update-The Economic Voice Limited

The Aussie dollar has made the most of this reprieve but still seems to have plenty of sellers in the rally with Gold moving steadily higher but facing good resistance ahead of $1700. Equities too are enjoying solid days as the expectation of lower interest rates for a long time to come give plenty of support.

But plenty of support will do nothing for England’s cricketers who seem determined to implode in glorious fashion in Sri Lanka. My intimation that they were heading along nicely was of course misplaced and I should equally have added we should have concerns as long as Jayawardene stayed at the crease. Our batsmen have been pitiful this morning collapsing to 122-7 with only Bell having any idea. False expectations once again to the fore! Must be the same as following the Shrimpers I hear you cry!!

Anyhow, enjoy another sunny day wherever you are.

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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