THE TIPSTER

 
Philip Salter
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SINCE breaking below the $80 level in spectacular fashion a few days ago, dollar-yen seems to have found some support around ¥79. The break below ¥80 could mean a retest of the post earthquake lows around ¥76.50. Capital Spreads quotes a price of ¥79.00-¥79.01.

European government bond yields are hitting lofty heights not seen for years, and it further fuels concerns about the Eurozone situation. As traders are still waiting on a decision from European leaders regarding a second bailout for Greece, the euro has found it tough to find stability against the dollar. However, as it seems an agreement may be approaching, the euro has fought back, and has seen the pair break above an intraday bearish channel which may signal further positivity for the single currency. Capital Spreads quotes $1.4185-$1.4186 on euro-dollar.

Today’s Bank of England minutes are likely to reinforce the perception that interest rates are likely to remain low for quite some time to come. This dovish tone has been one of the main reasons that the pound has slipped lower, particularly against the Swiss franc where it has been making all time lows. CMC Markets quotes SFr1.32079-SFr1.32159 on sterling-Swiss franc.

Cable has spent the last few months trading in a relatively tight range of just 500 points or so, but the impending news on the US debt ceiling could well present the opportunity for a break-out. It seems inconceivable that the US would default – a move that would decimate confidence in the greenback – but lifting the debt ceiling means printing more cash and the laws of supply and demand point towards dollar weakness as a consequence. IG Index quotes £1.6115-£1.6116 on sterling-dollar.

Since hitting 16-month highs of £0.9083 on 1 July, it has been all downhill for euro-sterling. After falling nearly 4 per cent in two weeks, it spiked lower to touch lows of £0.8703 on Monday morning. Significantly though, a strong trendline drawn from June 2010 lows again proved major support at those lows and helped propel it back to £0.8790. Look for the recovery to continue and euro-sterling to test £0.890 again soon. Spread Co quotes £0.8790-£0.8792.