Mike Paterson’s Daily Forex Brief

The US dollar was already showing signs of benefitting from the turnaround in risk sentiment that I reported yesterday but last night in NY the release of the last FOMC Minutes really set the cat amongst the complacent pigeons.

What was expected to be a formality of a release, given that markets thought they had heard it all before from Bernanke, turned into a real shaker as it was revealed that many members were in favour of ending QE before the 2013 is out!

Whilst this wasn’t entirely surprising (QE was always going to end once the labour market showed signs of pick up) the apparently growing desire to see it end earlier than anticipated gave the US bulls added reason to run amok.

EURUSD had already penetrated the key support at 1.3150 and had gone down further to test the next big point around 1.3080 before bouncing back above 1.3115. That was what we thought but once the Minutes were released we saw an immediate drop to 1.3060 and overnight in Asia we’ve seen a further fall to test 1.3000, where there is talk of decent support.

GBPUSD has also fallen dramatically and has so far been down to 1.6040 but neither pair is showing much of a bounce as I type.

EURGBP is still in freeze-mode around 1.3110 but the other big mover has been USDJPY which has surged yet again to 88.34 as Japan sets out on its path to dramatically weaken its currency in a manner that is even making the SNB look like amateurs.

Gold has also collapsed as investors pile back into the Dollar and currently sits at $1,639, levels not seen since last August.

MSPFX forex websitePlenty of data out today including the key US Non Farm Payrolls at 13.30 GMT when forecasters are looking for a good number, and it’s Friday and markets are still thin so we can expect another bumpy ride.. Definitely time to get your orders in.

Breaking News: UK Services PMI for December down from 50.2 to 48.9, which is not good news for an economy heavily dependent on its service sector. Should put a cap on any GBP rally/bounce back.

And talking of bounce backs let’s hope the Shrimpers can get back to winning ways in tomorrow’s FA Cup 3rd Round home tie.

Have a great week-end all, wherever it takes you.

Interbank Rates at 08:47 BST

Currency Pair


EURUSD 1.3012
GBPUSD 1.6052
EURGBP 0.8106
GBPEUR 1.2333
GBPCHF 1.4913
GBPAUD 1.5380
EURCHF 1.2090
GBPHKD 12.4451
EURHKD 10.0909
GBPZAR 13.8403
USDJPY 88.27
GBPCZK 31.1706

Today’s Data: BST

09.30-UK – Services PMI / M4 Money Supply / Mortgage Approvals / Net Lending to Individuals

10.00-EU – CPI

13.30-US – Non Farm Payrolls / Unemployment Rate

15.00-US – ISM Non- Manufacturing Index

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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