EUR/USD and Yellen: Levels, Ranges, Targets

If EUR/USD was reported yesterday for the full topside targets, the set up was 1.1664 and 1.1686. Next came 1.1744. The bottom most vital was located at 1.1606 and the EUR bounce began at 1.1626. What we knew about Queen Yellen yesterday early morning New York time was it didn’t matter one iota what she said as 1.1744 held then EUR/USD reversed. Queen Yellen was known and priced long in advance and the only number of concern was 1.1686 and 1.1606.

What’s special about Inflation targets is the protection of the bottom. As money supplies remain at far overbought and exorbitant levels, Inflation and Interest rates should be falling through the floor. This means purchased products should be extremely cheap because the currency must also fall. Money supplies up then interest rates, currency and Inflation all fall in unison.

Central banks and Queen Yellen must desperately protect the bottom against what should be a disinflationary world. Queen Yellen’s Fed Funds raise into an already overbought fed Funds was an added protection to protect the bottom. With bottom currently protected, the Queen is failing to return the money. We should be living in a race to the bottom world if sound economics was the proper practice.

In the Weimar Republic when harsh reparations were placed on the Germans, Germany had little choice except to add enormous amounts of money to the economic system to maintain the economic system. As money supplies spiraled higher then Inflation, Interest rates, German Marks currency and prices fell through the floor.

The German Mark went to worthless status yet prices for products were extremely low. The very few families that had German Marks piled those German Marks into a giant wheel barrow then took the wheel barrow to the few open stores to hopefully buy a loaf of bread and butter. Most could only buy butter or bread. Turnips was the most popular daily food for the masses for years. A German from those years would never consider eating a Turnip ever again. I retain today a few German Marks piled into those wheel barrows to buy bread.

Queen Yellen’s obligation is give back the money and stop risking the economic system for the 300 million. GDP and Inflation at 1% could easily fall to negative. Then what exists is Weimar Republic. Queen Yellen will be responsible yet Yellen can’t stop it if it began.

AUD/USD is a currency pair on the move for the first time in at least 1 year as the daily ranges maintain continuous expansion. The break points below are 0.8021, 0.8017 and 0.8002. AUD remains light years overbought and strategy should be sell rallies and don’t touch longs.

EUR/USD at current overbought 1.1706 has next support at 1.1686 on a break of 1.1707.

USD/JPY vital break points are located at 110.82 and 110.89. Topside break is 111.30.

Brian Twomey

EUR/USD and 50 Year Periods: Levels, Ranges, Targets

50 year market periods derive from 4’s because the BOE wa established in 1694 therefore next 50 year periods run to years 1744, 1794, 1844, 1894, , 1944 and 1994. Year 1944 was vital and typical historically as a new period because Bretton Woods 1% ranges in exchange rates were established. View number 4 in relation to 5 as the first start of the counting system and moving averages in multiples of 5.

From roughly 12 year increments broken down into 4 quadrants, the 1st period from 1994 runs to 2006. As expected in historic parallels in 1st periods, prosperity and trends become the dominant theme. From 2003 to 2006, economic boom times dominated and EUR overall in the 1st period went on a rampage higher from 0.8200 to about 1.3300’s.

To define the current 2nd period, add 12 years to 2006 and 2018 becomes the next vital inflection point. Ironically, its an important election year in the United States. Historic 2nd periods are corrective from 1st period trends and 2nd periods experience crashes and / or market changes. The 2008 crash was 2nd period. The free float in currencies was seen directly on the verge of the 2nd and 3rd periods which ran from 1944 to 1994.

Taken from 1972, year 2008 and the crash hit exactly on the 2 and 3 quadrant point. Add 12 to 2008 and the result is 2020. The larger dominant quadrant from 1994 informs 2018 is a crucial year and taken from the free float then 2020 becomes vital to mark the next 12 year period.

In current 2017 marks indecision year just as 2007 was an indecision year. Markets historically in every previous period in endings and beginnings experience indecision years. Markets lack a clue, trend, substance or direction in indecision years. Possibly we can view markets as a restructure and / or preparation for the new period ahead.

The import to today was define 2018 and what’s ahead due to the 323 year perfect accuracy in 50 year periods. Two persons understand periods, the great Martin Armstrong and my old college friend David Knox Barker. Barker has been studying and trading K, Wall and Kondrontieff waves, short and long periods and business cycles continuously since the early 1980’s. Only Barker could write a master’s thesis on Waves and biblical histories from Leviticus 25. Barker today is touted as one of the world’s foremost experts on waves and cycles.

GBP/USD resides in the same position as yesterday at break points from 1.3083 and below at 1.3030. Yesterday was 1.3051 to 1.3095. Don’t look for the 1.3083 break but rather look short to 1.3030.

EUR/USD. Target at 1.1686 and 1.1664 should stop the up move for today. The bottom break point today is 1.1606 as opposed to yesterday’s 1.1602.

USD/JPY supports today are located at 111.56 and 111.69 and upper break point at 112.10.

EUR/JPY massive resistance is found at 130.52 and 130.77

Brian Twomey

EUR/USD MA’s: Levels, Ranges, Targets


Following are moving averages from 338 days to 4690 days or January 1, 1998. Shorter term averages from 338 to 846 days are severely overbought and below current EUR/USD at 1.1650’s. EUR/USD remainder averages all reside above current price. The range at the low end at 338 day is 1.1007 and high end at the 2894 day is 1.2976. The mid point is located at 1.1991. The further point to note is the 10 year or 2562 day average resides at 1.2973.

EUR/USD currently trades between two break points above and below at 1.1511 and 1.1954. Both points represent the 846 day  and 1103 day averages. Above 1.1954, EUR/USD faces massive hurdles ahead at 1.2085, 1.2090 and 1.2097 and represents the 4754 day followed by 1279 and 4690 day. Next comes 1.2124 and 1.2202 at the 1356 and 4429 day averages.

Below 1.1511 at the 846 day, I’m watching the Distribution at 1.1279 and the 78 day average at 1.1123.  Despite averages above current EUR/USD price, downside EUR has light years of distance to travel before oversold becomes a concern. Below is the line up of averages

338 day = 1.1007

592 = 1.1020

846 = 1.1511

1103 = 1.1954

1279 = 1.2090

1356 = 1.2124

1615 = 1.2387

1874 = 1.2503

2129 = 1.2700

2385 = 1.2862

2562 = 1.2973

2639 = 1.2990

2894 = 1.2976

3154 = 1.2910

3411 = 1.2886

3588 = 1.2839

3665 = 1.2808

3922 = 1.2621

4174 = 1.2393

4429 = 1.2202

4690 = 1.2097

4754 = 1.2085 = Jan 4, 1999.


Brian Twomey


EUR/USD, Yield Curves, Trump: Levels, Ranges, Targets


Michael Pento yesterday informed the Chinese yield Curve is now negative and this adds to negativty in the Japanese, CHF, EUR, UK, NZD, CAD and USD. The dark period lies ahead as many more nations must contain unanimity in negative yield curves because the world operates on the same interest rate numbers inside tiny channels and the result is nations follow each other closely so not one nation gains advantage.

All nations operate against 2% Inflation, 1% GDP, Stimulus, low wages and 50 pip daily movements in each other’s exchange rates. So tightly bound are the nations, a disaster in one nation leads to a crash in all nations. And its done by agreement as opposed to the 1930’s currency market when nation set out to destroy each other’s exchange rates to gain export advantage as an economic rebuild from the depression.

Prior research suggests recession in 6 months by negative yield curves but as speculation and against all the nations in negative, is 6 months the threshold. Year 2018 is the next vital number in the 323 year history of central banks. The recession window is current to 2018. Not helpful is politics remains fluent for Trump.

Trump’s current threat comes from Special Prosecutor Mueller and his wide agenda to investigate any topic pertaining to Trump and at any period in time. Why can’t Mueller and his cadre of Democrat lawyers investigate the entire Republican party as he was granted the power. Attorney General Sessions recusal from Russia investigations leaves the number 2 and a Democrat at the Justice Department as the next person to fire Mueller. If number 2 refuses then comes a long line of Democrats at Justice who will also refuse.

Trump must eliminate Sessions, force an unrecusal and / or hire an Attorny General to neutralize and or outright fire Mueller. Against Mueller, Trump lacks any choice. The Democrats are using the old playbook when they brought down Nixon. Look for Trump to win and frustrate Democrats yet again against Mueller as the conventional Democrat approach to Trump will never work.

EUR/USD. Break above comes 1.1718, we’re looking at sell points today at 1.1688. Two break points below are located at 1.1602 and far below at 1.1552. Look for a bounce at 1.1601 if seen today.

GBP/USD. Currently caught between break points at 1.3095 an 1.3051. Below 1.3051 comes next 1.3022.

AUD/USD. Break points above are located at 0.7959 and 0.7969.

NZD/USD. Break points are located at 0.7454 and 0.7478 vs below at 0.7427.
Brian Twomey

NFP History and Forecast: Levels, Ranges, Targets

The good news to June’s 222 NFP job growth is the 222 figure is fairly contained within short, medium and longer term averages. The bad news is all monthly averages from 1 to 78 years have been dropping since May and September 2015. Prescient is my October 2015 NFP post to state averages from 1 to 30 years reached significant peaks. Further is my May 2015 NFP post to state the 5 year average was negative 498.88.

The 1 year monthly average in May 2015 was 208.83, climbed to 243.25 in September 2015 then dropped to 186.50. The 5 year average in May 2015 was negative 498.88, jumped to 199.10 in September 2015 and now sits at 206.38. The 2 year average was 191.37 in May 2015, bolted to 233.87 in September 2015 then dropped to current 194.25. The 10 year average in May 2015 was 66.19 and now resides at 69.34. The 25 year average in September 2015 was 108.50 and is now located at 125.35.

NFP monthly forecasts and final results are volatile because monthly averages are volatile and this volatility from month to month began with the first February 1939 release. The key monthly question is where are NFP’s forecasted from, what averages then a statistical determination is rendered. The March 2015 result at 86,000 was forecasted from the negative 5 year average and explains the drop from 2015 February at 238,000. NFP is commonly forecasted at the 5 year monthly average and this explains as one of many examples, June’s 222 Vs the 5 year average at current 206.28.

Misaligned averages result in outlier surprises such as 86,000 March 2015 and the most recent 43,000 in May 2016. February, March and April 2015, final NFP’s were 238, 86 and 262. April, May and June 2016, final NFP’s were 153, 43 and 297. Outlier surprises are trading opportunities as the final numbers must realign to the fast changing averages.

Second NFP driver and now more than ever in the 78 year history of NFP’s is the time to focus on the 50,000 because 50,000 is the currency market price break point. The 50,000 is seen more times in the last 3, 10 and 20 year monthly averages than any other time in NFP’s history.

The 50,000 was seen 85 times in the last 20 years, 71 times in the prior 20 years, 68 times in the prior 20 years and 37 times from February 1939 to 1952. Overall, the 50,000 was seen 261 times in 942 months or 1/4 over the life of NFP. The 50,000 will experience many breaks in the months ahead as explosive job growth is in the forecast.

Was the 2008 and 2009 period the worst NFP’s seen since the Great Depression. No Democrats because the release began in February 1939 and long past the Great Recession.

NFP Data is released for the month prior. July’s release for example was for June. August release will reflect July.

220 months or 18.3 years from a total of 941 months or 78.4 years were negative. This means 721 months or 60 years were positive job growth numbers. 2008 to 2009 or 23 of 24 months were negative. The next negative period was the 2001 terrorist attacks on the World Trade Center. Then the 1980 – 1981 recession followed by the Kennedy Assassination in 1960 to 1961. Further negative years include 1974 to 1975 and 1956 to 1958. Next comes 1952 to 1954 and 1944 to 1949. This period 1944 to 1949 was WW 2 as well as Bretton Woods. Charted, 1944 to 1949 was the worst period in NFP’s 78 year history due to a speculation of a smaller population and overall smaller number of persons in the workforce. Read WW2 history to realize, the US was ill prepared to fight a war. The US didn’t even have guns to match the Germans. Democrats at it again.

NFP’s above the next break at 226 means 226 resides above every monthly average and every median from 1 to 10 years in successive order and every 5 years until the 78.4 year monthly average from February 1939. A total of 24 monthly averages and medians reside below last month’s 222 NFP. The supports are many and not only strong but every average from 1 year to 78.4 years are deeply oversold. As NFP’s managed to maintain a 150 to 300,000 range from 2015, the averages dropped and now offers massive supports.

Any downside risks are located at 210.83, 209.38, 206.28, 200.83, 194.25 and 186.50 at the 1 year monthly average.The 210.83 is the 4 year monthly average then 3 year at 209.38, 5 year at 206.28, 6 year at 200.83 and 194.25 at the 2 year average.
Targets range from 247 to 350,000 job growth gains over the next months. The averages completed their correction lower and are now prepared to take job gains far higher which means the averages are ready to rise and further act as supports.

What higher NFP means is DXY higher, far higher and EUR lower.

Brian Twomey

AUD/USD, Iron Ore, Wool: Levels, Ranges, Targets

Australia’s Neutral interest rate at 3.5 and current OCR at 1.5 is fairly well positioned not only in terms of Australia alone but 3.5 based on Debelle’s speech sits below Canada and the UK and above Europe and the US. Australia need to move current interest rates is zero although two factors down the road for consideration. If the Neutral Rate rises, Australia will be forced to raise. If the AUD/USD exchange rate rises to unacceptable RBA levels then a hard decision by the RBA would ensue to lower OCR.

The current drivers for AUD/USD as most vital to Australia’s economics and exports is Australian Iron Ore prices are set daily by the United States. Australia is the world’s largest exporter of Iron Ore. Secondly, Australian Wool is experiencing a tremendous resurgence in demand especially from China.

Australia is the world’s largest Wool producer and exporter and Wool was the second largest export for Australia in 2006 – 2007 followed by Beef. Peak Wool production and exports occurred from WW2 to absolute Peak in 1951. Wool is auctioned daily in Australia and the most vital indicator is the Eastern Market Indicator, the EMI.

Like NZD Milk and Auctions, the EMI is priced in AUD as well as USD. AUD Wool since Aug 2015 trades comfortably above USD based on today’s Wool prices. The Current Wool supply remains low while demand is extremely high and offers the Wool industry an extraordinary opportunity. The problem with Exports to China is the current 38% Tariff placed on Wool imports. Trade negotiations are underway to eliminate or lower the Tariff.

At current AUD/USD 0.7900’s Exporters as well as the Wool and Iron Ore industry gains profits but if AUD rises higher then those profits are cut. Debelle’s statement on a higher AUD as unacceptable for Australia was as much Export as well as inside Australia economics related.

AUD/USD. Remember last post and AUD/USD 0.7790. AUD climbed to 0.7963. AUD remains at current prices Richter Scale overbought. Longer term averages 50 to 253 Day are in the twilight zone.

AUD break points today are located at 0.7937 and 0.7906. The sell point is located at 0.7961. Overall targets lower are 0.7899 and 0.7882. Over the days ahead, targets begin at 0.7764 and travel lower to 0.7670’s.


Brian Twomey

NFP Monthly Average Data: June 2017 to Feb 1939


NFP Data is released for the month prior. July’s release for example was for June. August release will reflect July.

220 months or 18.3 years from a total of 941 months or 78.4 years were negative. This means 721 months or 60 years were positive job growth numbers.

2008 to 2009, 23 of 24 months were negative. The next negative period was the 2001 terrorist attacks on the World Trade Center. Then the 1980 – 1981 recession followed by the Kennedy Assassination in 1960 to 1961. Further negative years include 1974 to 1975 and 1956 to 1958, Suez Canal? Next comes 1952 to 1954 and 1944 to 1949 This period 1944 to 1949 was WW 2 as well as Bretton Woods. Charted, 1944 to 1949 was the worst period in NFP’s 78 year history due to a speculation of a smaller population and overall smaller number of persons in the workforce.

Purpose of this exercise is first to derive a forecast for NFP on August 7. Secondly, I assisted much respected Goncalo at fxstreet on his soon to be released NFP paper. What I want to know is the 50,000 in 5 and 10 year increments dating to 1939. I mentioned many times this 50,000 figure and I’m accurate in my assessment especially for the past 3 years as well as 10 years.  Its amazing how many times the 50,000 figure appears in 20 year periods. In 261 months or 21.7 years, NFP came within the average for the prior month. This factors to 1 /4 over the life of NFP.  In the current 21.3 year period, the 50,000 was seen 85 times and the most ever in the history of NFP broken down in 20 year increments.

Tomorrow I run the data and see what’s going on.




Brian Twomey

EUR/USD and Draghi: Levels, Ranges, Targets


What we knew about King Draghi before any announcements was his position is weak as the Money Supply is overbought and interest rates fairly oversold. Draghi revealed his weak position by no comments regarding interest rates and the money supply. Draghi doesn’t want a rise in interest rates nor restriction to the money supply but he can’t have both as it must be interest rate rise and rescind the money supply or vice versa. In this relationship lies the proper level for the exchange rate and I don’t believe as a speculation the ECB has an intended target.

The key in this regard is the statement Inflation will be volatile over time. The question what is the proper level for Inflation, the 4th element, in regards to interest rates, money supply and the exchange rate. If the 2% Inflation Target is viewed in relation to the overnight rate then Draghi’s upper target from current 1.30 is the mid point at 1.81 then on to the vicinity of 2.3 at the highest end. The low end is located at 1.17.

Overall Draghi’s volatility in Inflation will be seen from 1.17 to 1.81. Don’t expect exchange rate volatility from such small numbers as we’re working on the far right side of the decimal point.

In relation to negative interest rates and by Silvio Gesell standards from 1906 in the Natural Economic Order, the Inflation rate should perfectly track the interest rate since the difference between Inflation and interest is minimal in relation to the price level. This relationship must hold extremely steady as the risk is to high Inflation risks a lower GDP. Draghi had nothing to say yesterday as he’s walking a tightrope.

Yesterday EUR/USD as well as EUR/JPY remained confined to the reported ranges. EUR/USD’s bottom was 1.1457 against the break point at 1.1465. Just above the break point at 1.1465 was levels 1.1488 and 1.1471. EUR/USD bouced from 1.1479 . The bounce was not only normal as EUR hit supports but we were getting the bounce anyway. We needed Draghi to inform where.
The next big line break point was 1.1564 then on to 1.1624. One aspect to understand in currency prices is the miles of difference between an everyday trade able level and a vital break point. It was natural and normal trading to continue longs at the break of 1.1564 but not normal to continue past 1.1624.

By this time the question is where is the short points and where to for targets. We don’t play games in our trades as we get in and get out as the break points allow. If the ECB traded yesterday, they traded the exact same points as we did.
EUR/USD. The big break line below for today is 1.1602. EUR must first break 1.1638, 1.1623 and 1.1608 then 1.1602. We will take longs in this area.

Above break points are located at 1.1703 and a 101 pip range from 1.1602. Yesterday’s range was 109 on either side of the break points so today we have a slight restriction of the range. While the overall break points restricted, the daily pip range expanded from yesterday’s 58 to today’s 59. And we’ll leave it here to ponder.


Brian Twomey

EUR/USD and EUR/JPY: Levels, Ranges, Targets


King Draghi’s risk is a far overbought Money supply as he competes in the stimulative race to the top against the United States. Draghi and the ECB’s higher interest and exchange rate is undesirable if Draghi rescinds the current money supply. To maintain the money supply and stimulus risks lower Wages, Lower GDP for the tradeoff in possible higher Inflation. The Current Account at 22 billion is near deficit and lower Brent prices may see the actual deficit appear.

Higher Inflation and Moey supplies maintains a higher Stock market and a payoff to money market funds and banks but at the expense of higher Wages and GDP for the masses. The United States last time saw 3% GDP was Q2 2006, 11 years and running. Draghi risks the same predicament as his current position is weak. The sledge hammer stimulus policy now comes to a vital cross road.

The analytical question is what would the economic situation look like today if Draghi, Yellen and all central banks observed their 104 year job duty to add and subtract weekly money to the system rather than stimulus. My questions to Draghi is what gives you this stimulus right, what was the overall intended goals because the effects are failures. Central bankers were never seen in 104 years prior but post 2008, they propelled themselves to sit front and center.


EUR/USD. The tops today for overbought EUR are located at 1.1624,1.1594 and 1.1564. At least the ECB offered symmetry for today. Below comes 1.1465, 1.1457 and 1.1406 as the extreme bottom. Longer term shorts must break current 1.1212.
EUR/JPY. Its the longer term averages overbought in EUR/JPY as well as EUR/USD. The longer term must break line to see far lower in EUR/JPY is located at 126.,09. Realistically for today, the extreme bottom is located at 127.92 then the normal bottom at 128.49. To head higher, must breaks are located at 129.44, 129.70 and highest at 130.36. Much resistance remains built into the daily topside for EUR/JPY.

The overall strategy for both EUR/JPY and EUR/USD remains sell rallies rather than attempt overbought longs.


Brian Twomey


BOJ, JPY and EUR/USD: Levels, Ranges, Targets


The last BOJ economic experiment occurred in the 1990’s and the 11th failed mission since WW2. Previous escapades focused on Oil imports and exports of Japanese products. The Japanese never formulated a successful mix in this venture.
The most outrageous economic attempt was the 1990’s Peg of USD/JPY to the Japanese Money Supply and to GDP. The idea was USD/JPY would trade and stabilize in between GDP and the money supply. The 1990’s was a fairly successful decade for nations and currency prices saw much volatility. Much volatility meant the Money Supply was wildly volatile therefore USD/JPY followed the money supply volatility. Intended BOJ targets for USD/JPY went miles out of kilter.

The overall added feature to the failure of the 1990’s venture was the Sales Tax increase. Japanese governments historically, Left or Right, fell deeply in love decades ago with not only Tax revenue but punishing taxes. Sales taxes were raised as well as Dividend taxes to equally abuse markets and the masses. Picture today’s Congressional Republicans and the anti American Democrats in the love for tax revenue and one will note to grow government and economic success is antithetical. Its an oxymoron to believe healthcare changes positively when tax increases remain at the same high levels.

The traditional Japanese end result to all 11 experiments is they follow the theories until it destructs. Theories because the Japanese never followed sound economics. Interesting for a college classroom but in practice, it never worked. The BOJ should state the same old tired routine. Stimulus remains and Inflation target seen years in the future.

The difference in today’s BOJ assessment from previous is the current Yield curve went negative as 10’s minus 3 month trade at 0.82, 10’s minus 2”s trade 0.81 Vs the 10 year at 0.07. Short end spreads trade above the Japanese 30 year bond. Long USD/JPY must see a yield curve reversal and a more positive message from the BOJ.

USD/JPY is oversold but stuck between vital break points at 111.54 and 112.50.

Overbought EUR/USD is fast approaching 1.2092 and the ECB’s point at 1.2013. Just as the Japanese are wedded to their experiments, I see Draghi continue with the overall 19 year mission to grow the money supply in “whatever it takes”. This means lower EUR over time.

The bottom side to EUR today is located at 1.1489 and 1.1481 where we see a bounce.

GBP/USD. Is fast approaching overbought yet again and vital break points are located at 1.2828 and 1.2808.

Watch JPY cross pairs as EUR/JPY is far overbought and break points are located at 127.73 Vs 131.51.
Brian Twomey

More M3 and EUR/USD: Levels, Ranges, Targets


When the ECB embarked on its continuous build of its M3 Money Supply in 1998 at 4286 billion, the Fed’s M3 was ahead of the ECB in 1998 at roughly 12 billion or 3 times the ECB. The FED today remains ahead of the ECB by 423 billion Seasonally Adjusted and 373 billion not Seasonally Adjusted. Its vital to compare USD to the ECB perfectly as the ECB releases its monthly data 1 month prior while the Fed is fairly up to date.

The Fed discontinued its M3 releases in 2006 due to its inability to forecast economic data therefore M2 must align against the ECB’s M3. The ECB’s choice in 1998 to remain competitive and not become an emerging market Vs USD was align the continent by the Euro and 1 interest rate. Nothing could stand against the ECB’s path to build M3. Wrong. The interest rate manipulation/ containment is in the way as the M3 / interest rate relationship is astronomically solid Statistically which means EUR/USD levels are dictated by the M3 / Interest rate relationship but fails to influence it as a sole driver. EUR/USD is the result of but not the cause.

So determined is the ECB’s 20 year path to continue to build M3, it went negative interest rates while the money supply was driven to far extreme overbought. Secondly, to break the M3 / interest rate relationship or at least to weaken it by interest rate control, the ECB revamped its interest rate system and is now in year 2 for this current experiment. M3 is light years overbought but the interest rate oversold is far less than M3’s overbought status. At a minus 90% correlation, interest rate oversold should match more perfectly to overbought M3.

In the way of M3 and interest rates is EUR levels. The last aspect the ECB wants in its monetary policy dictatorship is EUR levels to spin out of control or reach unwanted destinations. This ruins the dictatorship and cozy M3 /interest rate relationship because the ECB will be forced to act by money intervention or further manipulate interest rates.

Perfect ECB scenario is low low EUR/USD, low interest rates against far higher M3. Interest rate problem is not only is a floor being created but bottoms aren’t far. On the topside, EUR/USD trades as much based on interest rates as M3. The Commitment of Traders report informs every week the status of M3. But its weekly and mostly pablum information in its small changes. COT monthlies must align to M3 to inform the levels of EUR in relation to M3.

Normally EUR trades above M3 until the next M3 release at month end then EUR adjusts. Last, how is the EUR/USD correlation to M3. Lately, the correlations have been extremely low which informs the problem to the ECB’s intent to raise M3 because it leaves the EUR in a lurch and lost place.

EUR/USD. Good sell point for overbought EUR is 1.1490, 1.1483 and we’re looking at today 1.1477. EUR/USD hits the richter scale at 1.1493 and 1.1505. On the bottom, 1.1405 is a great lower target and eventual 1.1350’s in days ahead.
Brian Twomey

M3, Eonia and EUR/USD: Levels, Ranges, Targets


EURO introduction in November and December 1998 began with an M3 Money Supply at 4286 billion for November and 4368 billion in December. In December and November 1999, M3 grew to 4688 billion in December and 4636 for November. By August 2008 crisis time, M3 was 9091 billion and doubled 10 years later from 1998. From 9091 lows, current M3 grew much slower, 2517 billion, to present 11608 billion. Overall, from 1998 at 4286 to current day, the ECB grew M3 by 7322 billion.

By ECB osmosis, consequence or design to grow the money supply, M3 from the 4 year average to its 1998 start is in upper stratospheric overbought territory. M3 grew far faster than the averages allowed the growth to occur by at least 3 Standard Deviations in the short term. M3 growth embarked on a straight path upwards in most months since 1998, since 2008 and since 2016. Hardly was a down month seen. A down month or temporary halt was transitory. No wonder the Germans and Wiedmann in particular want an end to the ECB’s 60 billion per month in bond purchases.

M3 11608 at its current 5% growth rate  places M3 at 12188 highs and 11027.60 lows. How the ECB finances its bond purchases is questioned as current credit to European residents amounts to 17,458. From 11608, the next month’s bond purchases places M3 at 11668 then second month at 11728 and 3rd month at 11788. In 6 months, M3 grows to 11908 and 1 year to 12208.

Bond purchases at 60 billion viewed from assets, liabilities, currency in circulation, loans and overall deposits is an absolute sledge hammer and far above the question to economic stimulation. If stimulation was the actual reason for bond purchases, the ECB could perform the task far cheaper than 60 billion. Is the cost 1% and 2% for Inflation and GDP 60 billion and per month. Over 12 months, 60 billion leads to 720 billion.

Eonia Vs M3 shares not only a high negative 90% correlation but the first trend line resistance to a higher M3 is located at 12996.33 and 11328.93. Not only is 12996 a solid line but any number at 13 billion will meet further resistance from averages 1 year to 10 years and beyond. In June to September 2014, the ECB dilemma at M3 10824.83 and 0 Eonia was allow Eonia to go negative to enable M3 its further rise. In 3 years, Eonia dropped 36 basis points in negative territory while M3 gained roughly 7 billion.

If bond purchases raises the money supply further and if raising M3 is the overall ECB goal, Eonia will see a further drop. An Eonia drop means EUR/USD travels far lower. Alternatively, a drop in M3 permits Eonia and EUR to rise and an unwanted situation for the ECB. Eonia at minus 0.360 translates to positive 0.64. Eonia doesn’t contain a far distance to 0. At minus 0.460, Eonia translates to 0.54 and 0.44 at minus 560.

Consider the SNB’s current 3 month Libor at minus 0.73 or 0.27. Denmark, Swiss and Sweden all contain current interest rates below Eonia purposefully. Lower Eonia then Denmark, Sweden and Switzerland interest rates go to 0. The ECB is in a crucial situation.

M3 at the 1 year average is located at 11364 and 2 year at 11101.33 then comes the drop to the 3 year average at 10824.83 and 4 year at 10587.66. The 6 and 7 year averages are located at 10324.62 and 10207.71.Targets on the 6 and 7 year averages to offer what overbought means is 10935.67 and 10842.64.

Eonia’s first resistance line is located at the 1 year average at minus 0.3469 or positive 0.65. Resistance lines then travel to minus 0.1886 or 0.81, then minus 0.1049 or 0.89 and minus 0.0618 or 0.93. Eonia will remain negative and low far into the future.

The volatility component and directional dictator in the Eonia / M3 relationship is M3 while Eonia is stable. The 1 year range in Eonia for example is 0.03 while M3 ranged 494 from 11114 to 11608. Further, the average deviation for M3 over 7 year averages is 209.53 and 0.09 for Eonia.

Draghi and M3 hold the keys to EUR/USD. The 5 year EUR/USD average is located at 1.2093 and must breaks below at 1.1174 and 1.1050. Draghi’s further complication and reported by Peter at Thomson Reuters is the June 2016 EZ Surplus at 105.95 billion dropped to current 22.2 billion June 2017.


Brian Twomey


EUR/USD, Fed, Yellen: Levels, Ranges, Targets


United States Output as a percent change: 1.7% in Q1 2017, down from 2.7% in Q 4 2016. Hours worked current: 0. Ourput minus Hours worked to find Labor Productivity equals 1.7%. Total Labor Productivity by hour in Q1 2017 = 0, down from 1.8% in Q4 2016. When last Labor Productivity met current low was recession in Q1 1980. while overall Output barely exceeds Q1 1980. Hours worked in 1980 were negative while current Hours are barely positive and matches the 9 /11 / 2001 lows.
Average Hourly wage at $30.27 minus 1% Inflation equals 29.96. At 2% Inflation equals 29.66. To subtract Wages from Inflation reveals Real Wages. Real Wage Inflation against Purchasing Power for 300 million consumers drops against higher Inflation.

Manufacturing Labor Productivity in Q1 2017 current is 0.5%, down from 2.0% in Q4 2016 and 2.3% highs in Q3 2015.
Any reason why or how higher Inflation assists consumers. Low Inflation in past decades assisted in higher GDP and economic boom times.

When Queen Yellen was asked when balance sheet reductions would begin her answer was when the eonomy turned positive. The Queen never understood stimulus was the cause of crisis and not result to economic prosperity. Queen Yellen never trusted markets nor consumers as she can’t control neither. The uncontrollable is feared and treated with negative disdain. Hence why Forward Guidance, “prepare the market”, Communication strategies and the ultimate laughter in 5 year Median Fed Funds Dot Plots. Fear of the unknown and non ability to control is a psychological make up inherent in Bernanke and Yellen.

Interesting statement was the 4.4 trillion balance sheet won’t see lower than 1 trillion . This stems from the 2008 bank crisis laws in the Emergency Economic Stabilization Act of 2008 and an extension from the original 2006 laws. The mandate by banks was pay interest on required and excess reserves. This began the Bernanke / Yellen money creation machine to allow bond purchases by creation of short term debt for Fed purchases.

The vast majority of the 4.4 balance sheet consists of 2 to 5 year maturities and rolled over upon maturity, now in year 9. The idea by Bernanke / Yellen was a Floor system was naturally created in interest rate markets to spur short term money market borrowings in Repo Markets. No wonder Yellen further mentioned a further look at Repo markets and the Tri Party Repo in particular.

The larger 9 year picture result was masses of unproductive and created money sloshed around short term markets and earned little interest as the system over 9 years was stasis and lacked economic and interest rate growth. Yellen and Bernanke had 9 years to repair the system and never tried. Now the suspicious rush to raise Fed Funds and decrease the balance sheet.

The FED came a long way from its 104 year existence in 1913 from adding and subtracting weekly monies to the banking system to full market design, activism and participation.

The 2008 law, Dodd Frank and the chained link to CPI has all roads leading straight as usual to the Democratic Party. Good question to the effects of Chained CPI vs its allowable market free float. The current Discount Window rate is 1.75 and raised in the last rise in Fed Funds.

Higher Inflation, higher Interest rates and high balance sheets assures GDP remains low long into the future.

EUR/USD. The big line break today is located at 1.1458 and at 1.1480 EUR is done. Below 1.1374 and 1.1358 should contain EUR/USD for today.

AUD/USD. 0.7790 is AUD/USD’s big break line. What drives AUD higher is its dead neutral position Sunday and Monday but further in AUD/EUR as break points for AUD/EUR are located at 0.6804 and 0.6819 Vs 0.6788. Do or Die for AUD is here as a break of 0.7790 sees AUD far higher. AUD/USD remains Overbought.

GBP/USD overall big break lines are located at 1.2791 and 1.2789. Above break lines for today are located at 1.2979 then 1.3012 and 1.3020. A break below 1.2946 targets 1.2913.


Brian Twomey

Canada and Inflation: Excellent Discussion

Good morning. Senior Deputy Governor Wilkins and I are pleased to be here to answer your questions about today’s interest rate announcement and our Monetary Policy Report (MPR).

Today, we raised our key policy rate by 25 basis points, in the context of an economy that is approaching full capacity and with inflation expected to reach the 2 per cent target within the next year.

Before we turn to your questions, let me offer some insights into the deliberations of Governing Council.

Economic data have been encouraging over the past few months, globally and especially for Canada. We acknowledged this positive trend in our April MPR and in our May 24 press release, while noting concern about the sustainability of growth because of its composition, as well as US-based policy uncertainties. While uncertainties remain, delays in decision making in the United States seem to have moved some of those concerns more into the background. The Bank’s latest Business Outlook Survey, for example, finds very strong business sentiment, particularly for investment and hiring intentions, despite a lack of clarity about future US policies.

Since April, we have also seen further evidence of a broadening of growth in Canada. Along with stronger-than-expected growth, this has bolstered Governing Council’s confidence in the outlook for the economy and inflation. The economy is absorbing excess capacity more rapidly than we projected in April, and it now appears that the output gap will close around the end of this year.

That will nevertheless leave some slack in the labour market. As output growth continues to exceed potential, we expect companies to invest in additional capacity and draw from this slack in the labour market, thereby expanding potential output further. This process is difficult to forecast but is likely to become increasingly evident as we approach full potential. This is an important reason why monetary policy is not on a predetermined path. It will remain highly data-dependent as we move forward. One key indicator of progress will continue to be wage inflation, which has shown signs of a pickup in recent months but remains restrained by the lingering effects of the adjustment to low oil prices.

Meanwhile, inflation has continued to fluctuate in the bottom half of our target range. This has prompted a lively debate, not just in Canada but in many other countries, about the appropriate interest rate setting when economic growth is rapid but inflation is low. Governing Council examined this issue closely from two perspectives.

The first asks whether there are special factors that are temporarily pushing inflation lower, and we discuss this issue in a technical box in the MPR. Generally speaking, central banks prefer to look through temporary factors. Of course, our new core measures of inflation were developed to help us see through the noise in inflation data, but even these are not immune to temporary fluctuations.

After careful assessment of the evidence, Governing Council agreed that a significant portion of the recent softness in our measures of inflation should prove to be temporary. Nevertheless, even a one-time price change affects inflation for a year, simply because we gauge inflation on a year-over-year basis. Some temporary factors are themselves gradual rather than one-off, such as increased competition in retail food stores. This all serves to underscore the data-dependent nature of monetary policy.

All things considered, Governing Council judges that in the absence of temporary factors, inflation would be running at around 1.8 per cent, as excess capacity in Canada is estimated to account for an inflation shortfall of about 0.2 per cent. Accordingly, as the gap closes in the months ahead, we expect inflation to head toward 2 per cent, with the rate of convergence determined by how quickly these various temporary factors unwind.

Our projection shows a modest overshoot of the 2 per cent inflation target in 2019. This is a product of the dynamics of our model, but it is an important reminder that, while our target is 2 per cent, our control range is a symmetric
1 to 3 per cent. Having a target range acknowledges the uncertainty inherent in economic forecasting and inflation control. The chances of an overshoot will depend on how investment and potential output respond to tighter capacity constraints, a process that the Bank will monitor closely.

The second perspective on the low-inflation issue concerns the lags between monetary policy actions and their ultimate effects on inflation. It is worth remembering that it can take 18 to 24 months for a monetary policy action to have its full effect on inflation. This means that central banks must target future inflation by anticipating future deviations from target. And because inflation is measured with a lag, reacting only to the latest inflation data would be akin to driving while looking in the rear view mirror. In contrast, imagine a world where the Bank was able to anticipate all future movements in inflation, and adjust interest rates in advance to offset them and keep inflation exactly at 2 per cent. In such a case, it might appear to the casual observer that interest rates were being adjusted up or down for no reason.

Taking together the approaching closing of the output gap and our understanding of recent soft inflation readings, today’s increase in interest rates is clearly warranted. That being said, we will of course monitor the details of inflation carefully to determine the extent to which it remains appropriate to look through fluctuations in inflation.

Interest rates were lowered in 2015 in order to help the economy adjust to lower oil prices, and much of that adjustment is now behind us. While lower rates contributed to greater household financial vulnerabilities, enhanced macroprudential policies helped to mitigate these and will continue to do so. As the economy approaches full capacity, a higher policy rate in pursuit of our inflation target also serves to reinforce efforts to mitigate financial system vulnerabilities.

Governing Council acknowledges that the economy may be more sensitive to higher interest rates than in the past, given the accumulation of household debt. We will need to gauge carefully the effects of higher interest rates on the economy.

Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Bank’s inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities.

EUR/USD and Gold / Silver Ratios: Levels, Ranges, Targets




The exchange rate free float in the 1970’s went from currency pairs priced to Gold to interest rates. The 1970’s had a rough time to price currency pairs to interest rates because a brand new market was created and not known since the 1930’s. Yet in the 1930’s markets were still trading the various legacy Gold standard periods. How does markets just switch from 300 years of Gold Standard practices from its 1600’s beginnings. The next question was Gold Standards was a term like volatility or many of today’s generalized terms without proper definition or understanding, overbought / oversold, consolidation. Millions of general terms exist without definition.

Gold Standards are one aspect to the story as the world was and remains evenly divided between Gold Standard and Silver Standard currency pairs. Asia for example lives by and prices currency pairs to Silver. Mexico is priced to Silver while Europe is priced to Gold. Few currency pairs are priced as hybrids. JPY / USD as 0.008853 and MXN/USD as 0.05640 are classic Silver currency arrangements.

The trading methodology to tie the world together was Gold / Silver Ratios. High Gold Ratios translates as sell Europe currencies and buy Asia or vice versa. Current 77.0 Gold / Silver Ratios informs Europe currencies are far to high while Silver currency pairs far to low. Gold / Silver Ratios offer standard parameters against standard calculations and this situation won’t ever chamge as long as markets exist. Further, central bank’s ability to manipulate Gold / Silver Ratios is absent.

Bid and ask spreads were the main problem in the 1970’s but then the world tied together trades by Libor. Interest rate formulas like Gold / Silver Ratios are accompanied by set formulas inside set parameters and this calculation nor the parameters won’t change as long as markets trade.

While Gold / Silver Ratios and interest rates remain as the only trade vehicles to underlying exchange rate prices, books nor academic papers exist to understand the how part to the trade. Citi bank and the old Shearson Lehman manuals offer little to no hope to learn but both are good starts. Only 1 website in the world offers any resemblance to today’s interest rates.

The learn part must be accomplished by raw research, time, energy and desire. After 45 years of the free float, exchange rate knowledge remains not only sparse but interest rates and Gold / Silver Ratios knowledge is equally limited. Both beat any Statistic formulas on the planet and the calculations are far easier. Yet also at this stage of the game, the world isn’t interested in exchange rate, interest rate or Gold / Silver knowledge. Most published information is wrong or elementary anyway.

EUR/USD at 1.1389 and EUR/JPY at 128.68 sits at the day’s bottom. EUR/USD next stop is located at 1.1343 and 128.16 for EUR/JPY. EUR/USD remains overbought and heading lower.

AUD/USD and NZD/USD must break below at AUD 0.7730 then 0.7718 while NZD/USD must break 0.7325 then 0.7293 and 0.7262. AUD/USD big line break remains 0.7790 while NZD 0.7450.

Brian Twomey

EUR/USD, GBP/USD and USD/CAD: Levels, Ranges, Targets

And the winners of the American political system, first prize goes to Russia, Putin and his failure to become Peter the Great. Russia since Lenin and Stalin became specialists in chaos to other nation’s political systems. Kruschev in 1956 stated ironically at the Polish Embassy in Moscow, ” we will bury you from within”.

Close second winner goes to the Democrat Party to control the agenda, news media, policy and news media debates.

Close third winner goes to the news media to have public believe E mails caused markets to move. Fascinating as mind control and Janis groupthink became the new order of the day and all are falling to guilty.

Monday’s MA interest rate curve was 1.99, and dropped to 1.15 yesterday while today we are back at 2.00. The move yesterday was baked in while today is expected another move due to current price and location.

GBP/USD MA big line break is located at 1.2777. A break here then GBP goes far lower. Monday’s break points were 1.2778 and 1.2760. The marriage occurred at 1.2777. The BOE views the 1.2778 line today as must breaks at 1.2793, 1.2778 then 1.2761. Currently GBP is highly oversold and sits in do or die mode at 1.2777.

GBP Above must breaks are located at 1.2859 then comes 1.2874 and 1.2889. Further out comes 1.2916 and 1.2958.

USD/CAD. Overall Range points are located from 1.3023 to 1.2785, a 238 pip range and quite wide. CAD break points below are located from 1.2855 and 1.2882 to see 1.2839. Above 1.2925, 1.2953 and 1.2998. The big break is located at 1.3183. USD/CAD is highly oversold and focus on the upside should become current strategy.

EUR/USD. Highly overbought EUR/USD must breaks are located today at 1.1424, 1.1394 and 1.1365. Focus on the downside is current strategy. What holds EUR is big line break at 1.1156.

Congratulations for expert analysis to respected Fxstreet Goncalo Moreira for his paper on NFP.


Brian Twomey


Brian Twomey

USD/CAD: levels, Ranges, Targets




Canada’s yield spreads run 1.1, 0.70, 0.39 and 0.38. Viewed from OIS rates at 0.20’s all day long, rates trade below the furthest 10 to 30 spreads. The key to CAD’s OIS rates is long ago Canada extricated itself from Libor as was the new practice for many nations so to focus on internal systems to price exchange rates. The sidebar issue to Libor elimination is it explains why exchange rates no longer move in perfect unison. USD/CAD today will move big but all other nation exchange rates won’t follow. The glue that held nations in check together was Libor.

If CAD headline interest rates are viewed from 2 years out at 0.83 then a raise from 0.50 to 0.75 is viewed as a one and done. As much as I viewed this issue, I don’t see the multiple hikes over time as one bank on this site reported yesterday.More fake news possibly from the market people. I honestly can’t stomach these people.

Most importantly, I don’t see a valid reason why the BOC should raise. My CAD expert friend at Thomson Reuters reported yesterday, USD/CAD dropped 4% since the last meeting and Terms of trade for Canada improved. Canada lost on the Lumber issue but overall its not the big mover for Canada exports in Oil, Automobiles and Car parts.

Viewed from the USD triggers that move USD/CAD and from its current oversold condition, CAD/USD is heading lower and good prospect for further export gains. The level of the current exchange rate appears not as the raise issue but rather economics. Yet Inflation at 1.3 and GDP on the floor over the past 4 Quarters is question for hold rather than raise. Unless the raise question is arrest Inflation now and contain it over time. When Carney went to the BOE, he left Poloz with a sincere disaster.

Thomson Reuters prices 95% shot Poloz raises. I see 50 / 50 and on the edge.

Interested, 43 exchange rates as well as Levels, Ranges and targets were posted on my blog, including USD/ASIA in light of North Korea and Chinese dominance to the South China Sea islands and islands that don’t belong to China based on past treaties.

USD/CAD. Topside sell points 1.2948, 1.2979. Today’s range point exists at 1.3011. Bottom side 1.2826 is solidly oversold then 1.2834 and 1.2868.

The perspective at 1.3011, extreme prices are seen from 1.3037 which means 1.3011 will be a tough break. Longer term, a 591 and 335 day averages are located at 1.3148 and 1.3182 then comes 1.3191. An 847 day average exists below at 1.2587 yet for today, 1.2600’s inits extremes won’t allow 1.2587 to break anytime soon.


Brian Twomey


BUZZ-Look for BoC to soften the blow of a hike

Jul 10 11:24am By Peter Wadkins

Traders have already discounted a BoC rate hike on Wednesday, with odds at 95.64 on Eikon’s BOCWATCH, so the bank’s task afterward will be to soothe market concerns about what comes next since financial conditions have tightened in the run-up to the meeting and the loonie is crimping terms of trade. Gov Poloz’ recent comments bolstered the view that the BoC will press ahead [nL8N1JV3HN] with a 25bp rate hike despite USD/CAD’s 4.75% fall and oil’s 16-17% drop since their May 24 meeting. Some pundits think it may be a mistake [nNRA446mxm]. Poloz’s rationale is to head off inflation 18 months to 2 years from now, which is a hard sell considering stubbornly low inflation rates in the developed world. One-Yr Canadian BA rates have jumped 40bp since Sr. Dep. Gov Wilkins tipped the market on June 12th that a rate hike was coming later this year. Soothing comments will be the order of the day on Wednesday.




BUZZ-Look for BoC to soften the blow of a hike

Jul 10 11:24am By Peter Wadkins

Traders have already discounted a BoC rate hike on Wednesday, with odds at 95.64 on Eikon’s BOCWATCH, so the bank’s task afterward will be to soothe market concerns about what comes next since financial conditions have tightened in the run-up to the meeting and the loonie is crimping terms of trade. Gov Poloz’ recent comments bolstered the view that the BoC will press ahead [nL8N1JV3HN] with a 25bp rate hike despite USD/CAD’s 4.75% fall and oil’s 16-17% drop since their May 24 meeting. Some pundits think it may be a mistake [nNRA446mxm]. Poloz’s rationale is to head off inflation 18 months to 2 years from now, which is a hard sell considering stubbornly low inflation rates in the developed world. One-Yr Canadian BA rates have jumped 40bp since Sr. Dep. Gov Wilkins tipped the market on June 12th that a rate hike was coming later this year. Soothing comments will be the order of the day on Wednesday.

Yield Curves


While the current USD yield curve is inverted, the same inversions are found in yield curves for Europe, UK, New Zealand, Australia and Canada. The Japanese yield curve is positive while the Swiss yield curve is inverted but not to the extent of USD, Europe, Canada, Australia and New Zealand.

The case for inversions were derived from spreads in 10 to 3M Vs 10 to 30’s then middle portions from 10 to 5’s and 10 to 2 years. The question to measurement emanates from the 3 month interest rate. The Swiss for example in the all important 3 month libor views an inverted yield curve while in 3 month vital Debt Register Claims, the yield curve is Flat. Since Saron trades directly in relation and close to 3 month Libor, Libor was clearly correct.

The yield curve from German 3 month rates clearly shows a correct up slope yield curve in relation to the 10 to 30 spreads but a deep dip in 10 to 5’s and 10 to 2’s. Correct is to view 3 month Eonia to see the European yield curve inversion. Yet the deep dive in 10 to 2’s and 10 to 5’s is still seen.

The overall purpose for yield curve views is an economic perspective rather than a currency trade. European yield curves to trade EUR/USD is an absolute futile experiment. Measured against spreads to other nations is more inane. Same for GBP and the UK, Australia and New Zealand.

USD. 10 to 3 month = 1.35 Vs 10 to 2’s = 0.98, 10 to 5’s = 0.44 and 0.54 at 10 to 30’s. Overall, 1.35, 0.98, 0.44 and 0.54. From 10 to 30’s to 10 to 3m = 81 basis points. Fed Funds trades 1.16. A further Yellen raise, inverts the yield curve further.

GBP. 1.09, 0.98, 0.62 and 10 to 30’s = 0.64. From 10 to 30 and 10 to 3 month = 64 basis points. Bank Rate is current 0.25. GBP interest rates trade below yield curves yet Europe is the opposite as Interest rates trade above yield curves. How the UK /Europe union lasted is astounding. GBP is far more closely aligned to USD. Current GBP interest rates trade miles below yield spreads. A good case for a raise yet a raise inverts the overall curve further.

CAD. 1.1, 0.70, 0.39 Vs 10 to 30’s = 0.38 for an overall 72 basis point spread from 10 to 3 month and 10 to 30’s. Canada Bank rate is 0.50.

AUD. 1.06 or 1.28 from OIS rates then 0.90, 0.52 and 0.27 from 10 to 15 year for a total of 79 basis points. RBA interest rate is 1.50.

NZD. 1.12 then 0.93 and 0.32 at 10 to 5’s. OCR current is 1.75.

Japan. -0.82, -0.81, -0.87 and 10 to 30’s = 0.80. Negatives translate as 0.18, 0.19, 0.13 Vs 0.80. Call Rates traded last 0.95, Tibor at 0.0081 and Euroyen 0.0080. View Tibor as 1.0081 and Euroyen as 1.0080.

CHF. 0.74, 0.26, 0.48 and 10 to 30’s at 0.38 for a total of 36 basis points. Swiss interest rate is minus 0.75 or 0.25.

Current GBP Inflation at 2.9% runs above the 2.0 target yet lower GDP in the last 4 quarters to Q3 2016 ran 0.2, 1.8, 1.9 and 1.8. GDP was viewed as Real GDP against annual percents.

USD Inflation at 1.9 experienced lower GDP at 1.2, 1.0, 0.8 and 1.0.

Japan Inflation at 0.4 experienced higher GDP at 1.2, 1.0, 0.8 and 1.0 to match USD.

NZD Inflation at 2.2 experienced higher GDP at 3.0, 3.1 and 3.0. NZD has problems however as Employmenet rate is 4.9% and its Current Account Deficit runs minus 3.1 as a percent of GDP.

AUD Inflation at 2.1 and the low end of the 2 to 3% range experienced higher GDP at 2.2, 2.4, 2.4 and 2.7. AUD interest rate is 1.50.

Brian Twomey