Mike Paterson’s Daily Forex Brief
Chaos and mayhem ensued after Friday’s US jobs data despite the figures coming in close to expectation and we saw a blistering session which had traders chasing their tails as the Euro first dipped then rose to new highs, and the Pound just, well, dipped.
Concerns over PM Cameron’s EU negotiations, possible further monetary easing, not to mention some awful economic data have been undermining the Pound throughout January, all adding to investors’ decisions to repatriate money previously parked in the UK’s supposedly safe-haven.
The pressure on GBPUSD and the insatiable demand for the Euro, highlighted here on many occasions, had done immense damage as the month unfolded, and Friday afternoon it continued as February marked its arrival in blood-thirsty fashion.
Following the Non Farm Payrolls data which were fairly decent providing a feel-good factor EURUSD had a brief rally to 1.3665 then fell in layers to strong support lines around 1.3590 as some traders took profits on the lack of follow-through and others got stuffed on intra-day long positions. But then cue an oxygen-defying rise taking everything in its wake.
EURUSD hit 1.3711 in a straight line with EURGBP trading ever upwards to 0.8717 (GBPEUR down to 1.1472 . EURJPY was also another big riser in line with recent trends as USDJPY took off again after a sharp retracement of its own.
GBPUSD however, just kept on going down all afternoon. I had warned of decent technical sell interest around 1.5890 and, despite a push to 1.5875, the pair was always looking heavy. By the end of the afternoon we had been down to 1.5687 before finding a few buyers as EURGBP also paused for breath and came back quite sharply as EURUSD ended the day on the retreat.
An amazing session and if we thought January was lively then February is already proving its equal. Since Friday we’ve seen some further retracement in the Euro amidst warnings from French Finance Minister over the weekend that the currency could be too high to help. EURUSD is currently back on support lines around 1.3590 and EURGBP lower at 0.8640 as I type.
GBPUSD is still finding a few bids around 1.5700 but overall the Pound still looks very much the poor relation despite some consolidation at these lower levels.
Today sees little data of note but tonight we get the latest Aussie interest rate decision from the RBA. All in all it promises to be a lively week and some.
And what a lively week-end of sport! Terrific matches in the 6 Nations rugby with the highlight being Italy’s victory over France yesterday but Wales/Ireland served up a real tale of two halves in a rugby fest. England began their match against Scotland with a little wobble but superior class soon saw them through.
The football up and down the divisions wasn’t bad either, and the mighty Shrimpers duly took all three points with a later winner. And last night/this morning’s Superbowl was another real treat to finish it all off to take us into another week on a high even if somewhat bleary-eyed!
Have a good one out there.
Interbank Rates at 08:38 BST
|
Currency Pair |
Rates |
| EURUSD | 1.3597 |
| GBPUSD | 1.5713 |
| EURGBP | 0.8652 |
| GBPEUR | 1.1555 |
| GBPCHF | 1.4298 |
| GBPAUD | 1.5077 |
| EURCHF | 1.2373 |
| GBPHKD | 12.1822 |
| EURHKD | 10.5428 |
| GBPZAR | 13.9761 |
| USDJPY | 92.88 |
| GBPCZK | 29.5885 |
Today’s Data: BST
09.30-UK – Construction PMI
10.00-EU – Eurozone PPI
15.00-US – Factory Orders
00.30-AU – Trade Balance
03.30-AU – RBA Interest Rate decision
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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.