10 year yield V FX, Stocks, Commodities, DXY

The 10 year Treasury yield on September 3rd was 1.43, stalled September 8 -10th then resumed the uptrend to close at 1.899 on September 13. The yield rose 46 points.

Yield aside, the 10 year bond price September 3rd reached 99.00 dropped to September 13 at 97.6/ 32 as Treasuries are priced in 32nds as opposed to foreign bonds at 0.01.

To recap, 99.00 Bond price Vs 1.43 yield.

DXY September 3 – 13 dropped from 99.37 – 97.87 or 150 pips. The 10 year yield rose and DXY dropped. No such concept exists to 100 DXY. The bond price and DXY are at highest points while yields at bottoms.

Currencies Sept 3 -13

21 of 28 currencies rose and 7 currency pairs dropped as follows
EURAUD
EURGBP
USDCAD
GBPAUD
GBPNZD
EURNZD
EURCAD

Stock Markets, All risk assets rose as follows

FTSE DAX S&P, Nikkei, ASX SPTSX

The VIX was down

Bond Prices Sept 3 -13

JGB’s = Down Gilts = Down Bunds = Down Treasuries = Down

Commodities Sept 3 -13

WTI Up, yet Skitzy prices while Brent = Up. As an aside, WTI since January had a 5 Point range in every month since January. WTI lacks a serious Correlation to not only GDP but all USD financial assets.

Nat Gas UP

Gold Down deeply

Silver Down deeply

wheat UP
Copper UP

Soybeans UP

To define the 10 year Bond price

Bond price Current 97. 6/32

Maturity Aug 2029

Coupon Rate 1.62

Yield to Maturity 34.13% means price expected if held to 10 year maturity.

To understand 32nds

30 year Treasury yield is priced in 32nds and priced at $312.50 for each 32nd or $3,000 per point. One basis point on a 10 year bond is $1000.
A guide
From fraction to decimal,
1/32 = 0.0313,
3/64 = 0.0469,
1/16 = 0.0625,
5/64 = 0.0781.
At 63/64 = 0.9844 then comes 1.0 as a fully traded basis point.
From Fraction to percent,
1/32 = 3.125%
3/64 = 4.687%
1/16 = 6.25%
5/64 = 7.812
63/64 = 98.437%. Then 1.0 as a fully traded basis point.

What is safehaven and Safehaven assets and how is it defined Answer is any asset that is or follows a bond price because of the guaranteed obligation placed on bond payouts by governments. Gold and Silver past and present falls into safe assets.

DXY is safe while USD as general concept as USDJPY USDCHF USDCAD Fails definition. Yet USDCAD is a severe outlier Currency.

Yield curve maybe defined by actual yields but a true yield curve is interest rates because interest rates price yields and bonds. Actually, Yields and bonds are secondary financial instruments.

 

Brian Twomey

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EONIA Switch to ESTR

ECB will begin elimination of Eonia and replaced with $STR. on October 2
Massive change is the 3:00 a.m EST publication time from Afternoon EST in New York afternoon.
No longer will Eonia compete against FED Funds Rate released at 4:15 EST daily and published just shortly after Eonia.
Now $STR becomes its own standing Interest rate and competes against itself and other European interest rates.
This move, years in the overall ECB plan, represents the ECB full break with Fed Funds.
More importantly, the new plan represents the ECB‘s full control over EUR and all European Financial instruments as is the Methodology for all nations. European interest rates now fully decide their own price of their financial instruments to include Euro. Previous in NY afternoons, Eonia competed with Fed Funds as traders had a choice to trade USD or Eonia.
Its a smart move for the ECB.
 The 3 am publication means $STR moves ahead of the BOE  Sonia so EUR becomes King Currency as the first trade Currency over GBP.
Overall Trade lineup from FED funds 4:15 EST. As follows
3 am means americans daytrades are forced to trade as we do starting at 2:30 am or the day trade profits will be lost.
New $STR means EUR may predict 24 hours ahead accurately as is the case for all currencies. Previously, Eonia released in NY afternoons had to compete with not only Fed Funds but the next day’s Euribor release. Eonia was to involved against other interest rates to predict 24 hours ahead with perfect accuracy.
 EUR movements should be better, more sound. Forward STR will be calculated based on OIS trade rates
  The ECB’s transition to STR means no changes to overall Interest rates. The idea to go more negative interest rates forces CHF, SEK, DKK and NOK to cut their own rates lower as all interest rates from respective nations are located below Europe. Now is not the time for the ECB to act while in transition.
      Brian Twomey

FX Yearly Currency Price Cycles and Budgets

USD and yearly Currency Price cycles is explained by monthly Government budgets, predicated by Unitedstates

USD Oct

EUR Nov

GBP Feb/ March

CHF Feb

CAD March

JPY April

NZD May /June

AUD June / July

How Government budgets relates to Currency Futures is due to Futures trade based on money Supplies and explains why volume in Contract numbers are crucial to futures trading and relates directly to currency spot prices..

An overbought futures price occurs when price exceeded money Supply, while oversold or low price means a low money Supply.

Contango and Backwardation hardly explains prices fully.

Explains why volume is the first and oldest indicator coupled with its next oldest rival open Interest.

Futures contracts then and now trade as open interest is the Trade Signal while Volume is hedged.

Yet volume alone to money Supply is enough information for a trade.

Seen Normally as budget cycles is a Currency Price, Jpy for example, drops every April to allow Government to fund the budget., happened 14 times since 1995, except for weird markets years, 2019, 18, 2013, 2010, 2008, 2007, 2003, 1998, 1997. Yet up months contained small moves.

My trusted friend, http://tantalumwatches.com  exquisite top brand name Watches, #watches, Pocket Watches, Rings, luxurious, please have a look, Brian Twomey

 

Brian Twomey

Trump, Trade and 1977 International Emergency Economic Powers Act

International Emergency Economic Powers Act 1977

Below is a brief synopsis to a March 2019 Congressional Research Service 68 page report to answer by historical standards and to highlight the question to Economic Emergency and Presidential authority. Offered for educational purposes to synthesize factual context. Must stress, below derives not from original research.

The IEEPA contains a long and varied history since Woodrow Wilson from its WW 1 and 1916 /1917 derivation: Trading with the Enemy Act. The original purpose to Trading with the Enemy Act was an answer to Europe’s Executive Department regulation of economics and trade “with or without the support of respective legislatures.

Between 1916 -1917, Congress passed 22 laws granting President Wilson authority to seize control of United States private or foreign property for public use during the war. Private property was defined then as any property from Rail, Cars, Water, phones. Further laws granted Executive authority to Presidents over International Trade, Migration, investment, communication between enemies, FX, Gold and Silver, credit transfers.

Section 5 b under Trading with the Enemy Act was and lives today as crucial due to its grant of Presidents total Emergency Economic powers. The only difference today is 1970’s restrictions placed on 5b Emergencies over the decades to include Emergency timelines, cost, frequent reports, continued emergency declarations, nations, individuals and terrorist or enemy group targets.

Trading with the Enemy Act terminated in 1921 after WW 1 but revived by use of 5b under President Roosevelt in the 1930’s to include for all Western nations its new format: Presidential Emergency Powers during peacetime. Under 5b’s new format included during war and any national economic emergency declared by the president. Under any economic emergency, Roosevelt completely revived Wilson’s 5b powers to Trading with the Enemy Act.

Under 5b, Roosevelt declared a 4 day bank holiday to suspend all bank transactions to include regulation of foreign exchange, regulate bank credit transfers, seize private property, Gold, Silver and precious metals.

President Truman in the 1950’s began 5b Economic Emergencies to target nations: China and North Korea while the 1970’s began declared Economic Emergencies under newly passed Export Control laws as well as target Communist nations during the Cold War. One mainstay from Wilson to the 1977 International Emergency Economic Powers act of 1977 is declaration to the hoarding of Gold.

Related to Trump today is Lyndon Johnson’s 1968 Emergency declaration under 5b powers to limit Direct Foreign Investment by US companies to strengthen the Balance of Payment position of the United States.” Nixon then placed a 10% Tax on imports entering the United States at the same time the Gold Standard was lifted in favor of the FX free float.

By the 1970’s first review of Economic Emergencies and 5b, the United Stated declared 470 Emergencies without time limitations. Then began the revelation to declaration of Economic Emergencies to a dictator or a president who sought autocratic power due to the broad powers granted under Economic Emergencies without Congressional control.
Reforms began with passage of the National Emergencies Act of 1976 to eliminate past emergencies and 5b remained. A President must now inform Congress to Economic Emergencies and under a twice yearly review, Congress by vote may eliminate the Economic Emergency.

5b Provisons were not reformed in a true sense under the 1977 International Emergency Economic Powers Act except a President must inform Congress, submit reports, highlight exact Emergency or threat, provisions for foreign nations, individuals or groups blocked, frozen or seized assets. Economic Emergencies to Commerce was expanded under 5b since the Trading with the Enemy Act to include sanctions. A total of 54 Economic Emergencies were declared since 1977 and 32 remain ongoing today against an average duration of 10 years.

Domestically, Hurricanes are always declared Economic Emergencies, the 9/11 Terrorist attacks and Trump’s Immigration on the Southern Border Southern dilemma. The Iranian hostage crisis of 1979 remains the longest ongoing Economic Emergency.

Economic Emergencies under 5b expanded to include chemical and biological weapons, cyber attacks, religious persecution. Broad powers were expanded under 5b Transaction to include target individuals, groups, and provisions for law violations.

In Trade as past precedents to Trump’s China tariffs, Nicaragua and South Africa were restricted from Trade with the United States in the 1980’s, Trump targeted Venezuela’s Oil company Petro of Venezuela as well as many individuals related to trade.

Overall, as 5b Emergency Economic threats became apparent to national security, 5b provisions under the 1977 act expanded. Trump China Tariffs and Trade restriction contain every legality under 5b and the 1977 International Emergency Economic Powers Act.

 

Brian Twomey

DXY, Yields, Interest Rates, GDP

1 Year Yield as % =1.7170  Interest Rate =2.7170

2 Year Yield as % =1.4860 Interest Rate 2.4860

3 Year Yield as % =1.4380 Interest Rate 2.4380

5 Year Yield as % =1.4230 Interest Rate 2.4230

7 Year Yield as % =1.4970 Interest Rate 2.4970

10 Year Yield as % = 1.5620 Interest Rate 2.5620

20 Year Yield as % 1.82 Interest Rate 2.82

 

Commercial Paper as % = 2.03 Interest Rate 3.03

GDP as % = 2.1 Interest Rate 3.1

CPI Annual as % =1.81 Interest Rate 2.81

CPI Quarter as % =0.3 Interest Rate 1.3

 

30 Year Yield as % =2.044 Interest Rate 3.044

DXY 98.20

Fed Funds Effective as % = 2.13 Interest Rate 3.13

Headline as % =2.25 Interest Rate 3.25.

Commercial Paper as % = 2.05 Interest Rate 3.05

Commercial Paper as % = 2.08 Interest Rate 3.08

GDP as % = 2.1 Interest Rate 3.1

Absolutely Powell Raised  rates to high and to quickly and as the end result was a severely misaligned yield curve. All Fed interest rates and GDP trade above the 30 year yield while Europe and the EUR trade between the 20 and 30 year yield.

Both Europe and USD suffer from severe mis alignments. Proper for USD is Fed interest rates below yields and for Europe, ECB interest rates above yields. Between FED and ECB interest rates and yields, convergence trades. Not sure ECB easing makes any sense due to yield and interest rate positions. Easing drops interest rates further yet ECB money supplies were always on the rise since 2008 in the current 12 billion vicinity and I always assumed the ECB goal was to not allow money supplies to deviate far from USD in order to hold the EUR at an acceptable exchange rate Vs USD.

Yet Eonia 0.636 V 2.13 Fed funds allows for a 1.49 spread. This spread must break wider.

For Fed Cuts, Trump is right, Powell must ease while the ECB must tighten, not ease to rightsize both systems. And especially now as GDP is in good shape as mentioned months ago from GDP long term averages. CPI below GDP as well is correctly aligned.

 

Brian Twomey

 

EUR/USD, Yields V Interest Rates

This post information is in extreme early development stages.

German Yields and Interest Rates Vs EUR and ECB Interest Rates

1 year Yields as % =-0.843 = Interest Rate 0.157

2 Year Yield as % =-0.906 = Interest Rate 0.094

3 Year Yield as % = -0.9516 = Interest Rate 0.0484

4 Year Yield as % =-0.9537 = Interest Rate 0.0463

5 Year Yield as % =-0.9257 = Interest Rate 0.0743

6 Year Yield as % =-0.899 = Interest Rate 0.101

7 Year Yield as % =-0.864 = Interest Rate 0.126

8 Year Yield as % =-0.8026 = Interest Rate 0.1974

9 Year Yield as % =-0.777= Interest Rate 0.223

10 Year Yield as % =-0.688 = Interest Rate 0.312

20 Year Yield as % = -0.4137 = Interest Rate 0.5863

ECB Interest Rates and EUR Trades here

-0.385 % = Interest Rate 0.615

-0.403 % =Interest Rate 0.597

-0.420 % = Interest Rate 0.580

-0.423 % = Interest Rate 0.577

-0.427 % = Interest Rate 0.673.

30 Year Yield as % =-0.224 = Interest Rate 0.776

EUR Trades between 20 and 30 year yields from 0.5863 to 0.7760 or 1897 points  and ECB 0.577 to 0.673 or 96 points but this will tighten in another day.

Brian Twomey

 

Long Term Targets, Deviations and Cycles

One time in any given year, currency prices are sufficiently deviated enough to offer the most easiest, most profitable, most guaranteed market derived trades. The profits earned by this one period will outperform money results by trading an entire year. Why is based on the question to define markets and trading and the action of market prices.

All market prices in all financial instruments travel from deviation to non deviation then back to deviation and non deviation again. Most profitable period to earn easiest money is at the peak of the deviation to trade to non deviation. Once non deviation is achieved, trades are difficult and won’t perform to the profit potential of highest deviations because prices are on the way to deviation again. This means traders can refrain from trading for almost an entire year to wait for the peak deviation period. Think in terms of a winner lottery ticket, a broken ATM machine that ejects money.

Trades past, present and future are defined as a target number and doesn’t require a chart, graph, stop, focus on central bank meeting, economic releases, tariffs. A target price must achieve its destination and it doesn’t have any other choice.

The amount of trades in any year is defined as 7 or 21 to cover 28 currency pairs but the amount depends on what is deviated. Total trades are higher if emerging market currencies are included as a deviated market includes all markets.

Non deviation to deviation is a process and takes 1 year to achieve maximum peak levels.

For the past 3 years, the 2nd quarter and sometimes part 3rd quarter was the time of highest peak levels.

Deviation to answer what is deviated means either USD and Non USD or cross pairs. Each year USD and Non USD take deviated turns to cross pairs. 3 years ago, USD and Non USD was most deviated and this means only 7 USD and Non USD were the trades. Last year, cross pairs were most deviated to USD and Non USD and this means 21 trades became available. This year, USD V Non USD are most deviated. Next year, cross pairs will become the most opportune trades for 21 total trades.

Trade duration to targets usually means as much as 1 quarter, 3 months or 12 weeks. Depends on the currency pair, deviation and time to achieve target.

I’m waiting for the time when USD and Non USD and cross pairs deviate at the same time to maximum peak and this current quarter is under this very question but only as it applies to GBP yet my suspicion is markets would never allow a greater distance than exists today and the past 3 year example.

A non deviated market refers to roughly 150 to 250 pips. This deviation is built into the price system naturally. By speculation, its impossible to achieve less. A non deviated market for the past 3 years travels to maximum peak deviation at roughly 600 pips. From 150 and 250 to 600 defines a fairly normal functioning yearly market. Higher than 600 refers to abnormality. Current year trades at abnormality. Abnormality can only mean the expected correction never arrived as anticipated and prices continued on their wayward path.

When cross pairs are deviated, USD and Non USD trade in tiny ranges while the opposite holds true. When USD and Non is deviated, cross pairs trade in tiny ranges. Markets allow deviations to achieve non deviation status.
The foundation to such price concepts must derive from the current 12 1/2 year economic period and 4th period but also the last quadrant in an overall 50 year time frame. In comparison, currency cycle trends are 9 years, a 3 1/2 year price lag to the economic cycle. The 9 years means mini cycles of 4 at 2.25 years while economic cycles are 4 periods of 3 years. Market prices are laggards to the economic cycles.

GBP pairs are most abnormal followed by AUD, NZD and EUR while USD is fine. AUD, NZD and EUR fall within regular bounds of overall normal functioning markets.

Below are currency pair price targets, normalization point and deviations then deviations to long term targets.

GBP/USD. 1.3600’s target, Normalization 1.2900’s = 900 pip deviation and 1600 pip deviation to target.

GBP/JPY. 147.00’s target, Normalization 136.00’s = 1000 pip deviation and 2100 pip deviation to target.

GBP/CHF. 1.3200’s target , Normalization 1.2400’s = 800 pip deviation and 1500 pip deviation to target.

GBP/CAD Normalization 1.6500’s and 700 pip deviation.

GBP/NZD Normalization 1.8800’s and 300 pip deviation.

GBP/AUD Normalization 1.7900’s and 200 pip deviation.

AUD.

AUD/USD 0.7400’s target, normalization 0.6900’s = 200 pip deviation and 700 pip deviation to target.

AUD/CHF 0.7375 target, Normalization 0.6800’s = 300 pip deviation and 800 pip deviation to target.

AUD/JPY 80.00 target, Normalization 74.00’s = 300 pip deviation and 900 pip deviation to target.

NZD

NZD/USD. 0.6800’s target, Normalization 0.6600’s = 200 pip deviation and 400 pip deviation to target.

NZD/CHF 0.6800 target, Normalization 0.6500’s = 300 pip deviation and 600 pip deviation to target.

NZD/JPY 72.00 target, Normalization 71.00’s = 300 pip deviation and 400 pip deviation to target.

EUR

EUR/USD 1.1547 target, Normalization 1.1216 = 300 pip deviation to target.

EUR/JPY 124.00’s target Normalization 121.00’s = 300 pip deviation and 600 pip deviation to target.

EUR/AUD. 1.5700’s target Normalization 1.6200’s = 200 pip deviation and 700 pip deviation to target.

EUR/NZD No deviation

EUR/CAD No deviation.

USD

USD/CHF No deviation

USD/JPY no deviation

CHF/JPY no deviation.

USD/CAD. 1.2800’s target, Normalization 1.3200’s = no deviation and 400 pip deviation to target.

CAD/JPY 84.00’s, Normalization 81.00 = 200 pip deviation and 500 pip deviation to target.

 

 

 

USD V 16 EM Currencies: Preliminary Results

  Targets Complete USD/RUB, USD/RON, USD/PLN, USD/TRY, USD/HUF, USD/ILS, USD/CZK, USD/BRL and USD/THB.
USDRUB. Close 65.2713. Overbought. Short target 64.7318 on break 65.0788. Weekly Range 66.1211 -64.7318.
Break 64.0373 Targets 63.3427. Actual Range 65.8806 -64.9656. target almost Complete,
USDRON. Close. 4.2536. Neutral. Short 4.2697 to target 4.2464. Weekly range 4.2930 -4.2464. Break 4.2231 targets 4.1998.
Actual Range 4.2562 -4.2068. Missed short 4.26 but 4.2231 -4.1998 Valid, Trade runs +163 pips
USDPLN. Close 3.8781. Deeply overbought. Short target 3.8431 on break 3.8676. Weekly range 3.8921 -3.8431.
Actual Range 3.8825 -3.8410. Target Complete. +350 pips about
USDMXN. Close 19.3055. Severely overbought. Short target 19.2077 on break 19.2793. Weekly Range 19.3509 -19.2077.
Break 19.1361 targets 19.0645. Actual Range 19.2983 -19.6994, Target not Complete Yet
USDTRY Close 5.5611. Oversold. Good long point 5.5294 to target 5.5719. Weekly range 5.4021 -5.5719.
Break 5.6568 targets 5.7417. Wide range Currency Pair.
Actual Range 5.6171 -5.4787, Target Complete from 5.5294 -5.5719 +425 pips
USDHUF Close 294.6400. Overbought. Short target 293.1945. Bonus short point 296.7659.
Weekly Range 300.3375 -293.1945. Break 289.6230 targets 286.0515.
Actual Range 294.78 -289.55,
Target 293.19 Complete +145 pips
USDMYR Close 4.1575. Deeply overbought. Short target 4.1403 on break 4.1496.
Weekly Range 4.1403 -4.1589. Break 4.1310 targets 4.1217.
Actual Range 4.1973 -4.1561. Bonus Short on severely disjointed prices
USDILS Close 3.4939. Oversold. Long 3.4723 to target 3.5153.
Weekly range 3.4293 -3.5153. Break 3.5583 targets 3.6013.
Actual Range 3.4782 -3.5015, almost at target
USDINR Close 69.7000. Overbought. Short 70.0881 to target 69.6925. Weekly Range 70.4837 -69.6925.
Break 69.2969 targets 68.9013. Actual Range 71.04 -70.10, target not complete Yet
USDCZK Close 23.1790. Short target 23.0156 on break 23.1488.
Weekly Range 23.2820 – 23.0156. Break 22.8824 targets 22.7492.
, Actual Range 23.1881 -22.9461 Watch 22.8824 Target Complete 
USDSGD Close 1.3773. Deeply overbought.
Short target 1.3692 on break 1.3734.
Weekly range 1.3692 -1.3776. Below 1.3650 targets 1.3608.
Actual Range so Far 1.3756 -1.3853. Bonus Shorts
USDBRL Close 3.9800, Deeply overbought. Short target 3.9230 then 3.8590. Must cross 3.8910.
Weekly Range 3.8590 -3.9230. Below 3.8270 targets 3.7950.
Actual Target complete, Weekly range so far 3.9840 -3.8840
USDTHB Close 30.7150. Overbought. Short target 30.4329. Sell point 31.7613. Must cross 31.5971.
Weekly range 32.0897 -31.4329. Break 31.1045 targets 30.7761.
Actual Range so far 31.12 -30.43 or 69 pips on intetestrate cut. Target Complete. 
USDZAR. Close 14.7885. Deeply overbought. Short target 14.5098 then 14.4134.
Break 14.2206 targets 14.1242. Wide range currency pair.
Actual Range 14.9995 -14.7335. target Not complete Yet
USDPHP. Close 51.6500. weekly Range 51.4891 -51.9105.
Break 51.4891 targets 51.0677. No thrills here, Correct.
Actual Range 51.5150 -52.3770.
USDCNY Close 6.9405. Overbought. Weekly range 6.9348 -6.8992. Target 6.8992. Must break 6.9704.
Below 6.8636 targets 6.8280. Target not complete
                  Brian Twomey

Smithsonian Agreement

December 1971

In December 1971, monetary authorities from the world’s leading developed countries gathered in Washington, DC, in an ultimately unsuccessful attempt to rescue the Bretton Woods global monetary system.

21st December 1971: US Treasury Secretary John Connally, right, Chairman of the meeting of the Group of Ten Ministers, chats with Renaldo Ossalo, at a meeting on international financial affairs.

21st December 1971: US Treasury Secretary John Connally, right, Chairman of the meeting of the Group of Ten Ministers, chats with Renaldo Ossalo, at a meeting on international financial affairs. (Consolidated News Pictures/Hulton Archive/Getty Images)


by Owen HumpageOffsite link, Federal Reserve Bank of Cleveland

In December 1971, monetary authorities from the world’s leading developed countries met at the Smithsonian InstitutionOffsite link in Washington, DC. They hoped to rescue an international arrangement that was rapidly disintegrating, the Bretton Woods system of fixed exchange rates. The Smithsonian Agreement is what they came up with, but it proved too little, too late. Within fifteen months, the Bretton Woods system collapsed.

The basic structure of the Bretton Woods system contained a flaw that began to emerge in the early 1960s. Bretton Woods was based on gold, but the global gold stock could not meet the world’s demand for international reserves, without which pegged exchange rates were impossible. Consequently, the United States provided dollar reserves by running a persistent balance of payments deficit and promised to redeem those dollars for gold at $35 per ounce. By 1961, however, the amount of dollar claims outstanding began to exceed the US government’s stock of gold. The deficit of gold implied that the United States might not be able to keep its pledge to convert dollars for gold at the official price. It might have to devalue the dollar.

The prospect of a dollar devaluation created strong incentives to exchange dollars for US gold. The US Treasury and the Federal Reserve tried to keep this from happening through stop-gap measures, but they could not solve the underlying paradox: Without additional dollar reserves, the system was unworkable; with additional dollar reserves, the system was unstable.

This difficult and uncertain situation became even worse after 1965. A rising US inflation rate expanded the US balance-of-payments deficit and pumped even more dollars abroad. Inflation in the United States rose from less than 2 percent in early 1965 to 6 percent by the end of 1969. The existing structure of fixed exchange rates seemed unsustainable in the face of such inflation. By the summer of 1971, speculators were moving funds out of dollars and into foreign currencies, and central banks were rapidly converting dollars into US gold.

In August 1971, President Nixon “closed the gold window,” that is, he no longer allowed foreign central banks to exchange dollars for the US Treasury’s gold. While the flaws of Bretton Woods and the Federal Reserve’s monetary policy had certainly played a role in the situation, Nixon also blamed the US balance-of-payments deficits on unfair trading practices and other countries’ unwillingness to share the military burden of the Cold War. He wanted foreign currencies to appreciate against the dollar, but he did not want to devalue the dollar in terms of gold (Silber 2012, 93).

Nixon’s actions sent shockwaves through the international community. A crisis atmosphere prevailed. Many key foreign currencies began to appreciate against the dollar, despite heavy intervention. Restraints on cross-border financial flows began to emerge. Monetary officials around the globe feared international monetary relations would collapse amid the uncertainty about exchange rates, the imminent spread of protectionism, and the looming prospects of a serious recession. Officials at the International Monetary Fund immediately pressed for negotiations to revamp exchange-rate parities and address other complaints about the international financial system (de Vries 1976, 531-556).

At the Smithsonian meeting, the United States agreed to devalue the dollar against gold by approximately 8.5 percent to $38 per ounce. Other countries offered to revalue their currencies relative to the dollar. The net effect was roughly a 10.7 percent average devaluation of the dollar against the other key currencies (de Vries 1976, 555).

At the Smithsonian meeting, countries also agreed to future talks on broader reforms of the international monetary system. Issues that would be discussed included the central role of the dollar, shared responsibility for exchange-rate stability, the future role of gold, a means for easing exchange-rate adjustment, and measures to deal with volatile financial flows. Foreign nations also agreed to comply with Nixon’s request to lessen existing trade restrictions and to assume a greater share of the military burden.

The Smithsonian Agreement did little to restore confidence in the Bretton Woods system. During 1972, speculators pushed many European currencies toward the tops of their permissible—but now wider—exchange-rate bands. By intervening, their central banks accumulated large amounts of unwanted dollars, which stoked inflationary pressures. Germany and Japan expanded their restraints on financial flows, and other countries began to follow suit.

Gold prices, a barometer of uncertainty, rose to around $60 an ounce by mid-1972 and $90 an ounce by early 1973. Speculation was rife. On February 12, 1973, with exchange markets in Europe and Japan closed, the United States devalued the dollar by an additional 10 percent to $42 an ounce. When markets reopened, speculation against the dollar became rampant. Within a month nearly all major currencies were floating against the dollar. The Bretton Woods system was finished (IMF 1973, 2-8).

Brian Twomey

China Currency Manipulation Vs Bretton Woods

Brettonwoods Basics 1. 1% exchange rate movements 2. exchangerate hashtagprices reflects trade. 3. Gold convertability to Fixed Price.
Bretton Woods strengthened. What changed, 1936 Tripartite Agreement ended 1930’s FX Tradewars by agree to end FX Competitive Devaluations, specifically UK and French Franc.
Led to Bretton woods.
2 US Congressional Laws govern FX and Currency Manipulations by treasury.
1. Omnibus Trade and Competitiveness Act 1988. 2. The Trade Facilitation and Trade Enforcement Act of 2015
The Omnibus Trade and Competitiveness Act of 1988 requires the Treasury to provide semiannual reports to Congress on international economic and exchange rate policy. Under Section 3004 of the 1988 Act, the Secretary must: “consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” This determination is subject to a broad range of factors, including not only trade and current account imbalances and FX intervention , but also currency developments, exchange rate practices, foreign exchange reserve coverage, capital controls, and monetary policy
                      Brian Twomey

The Trade Facilitation and Trade Enforcement Act 2015

The Trade Facilitation and Trade Enforcement Act of 2015 calls for treasury to monitor macroeconomic and currency policies of major trading partners and conduct enhanced analysis of and engagement with those partners if they trigger certain objective criteria that provide insight into possibly unfair currency practices.

Key word Monitor, established Monitor list against 3 thresholds:

1. Trade Goods Surplus with US = $20 billion., 40 billion annual. Currently 21 nations in violation and accounts for 90% of all trade Surpluses with US.

The Monitoring List comprises Japan, Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam

2. Material Current Account Surplus = 2% of GDP, Previous 3%. and

3. Persistent one sided FX Intervention net purchases = 2% GDP over 6 -12 months., previous 8 -12 months.

china earned right to 2 year Monitor list, also agreed at G20 to refrain from Competitive devaluation.

Currency Manipulation Threshold, speculation is 10% movement over 6 -12 months.

China qualifies from 2018 lows 6.92. Criteria is from Long Run average?.

Bretton Woods remains only strengthened. 1% movements speculation equals 1 to 10% allowable movements.

2. Gold and Silver in free float still completely connected to Gold and Silver Currencies. Gold to Gold Currency spreads however are never far from each other and the same for Silver and Silver currencies.

The Gold Silver Ratio is more than an indicator to trade Gold and Silver but allows for trades in currencies at the same time.

 

Brian Twomey

Creation of the Bretton Woods System

A new international monetary system was forged by delegates from forty-four nations in Bretton Woods, New Hampshire, in July 1944. Delegates to the conference agreed to establish the International Monetary Fund and what became the World Bank Group. The system of currency convertibility that emerged from Bretton Woods lasted until 1971.

Delegates from 44 countries listen to Senator Charles Tobey speak at the plenary session of the United Nations Monetary Conference in Bretton Woods, New Hampshire.

U.N. Monetary Conference (Photo: Associated Press; Photographer: Abe Fox)


by Sandra Kollen Ghizoni, Federal Reserve Bank of Atlanta

The United Nations Monetary and Financial Conference was held in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire, where delegates from forty-four nations created a new international monetary system known as the Bretton Woods system. These countries saw the opportunity for a new international system after World War II that would draw on the lessons of the previous gold standards and the experience of the Great Depression and provide for postwar reconstruction. It was an unprecedented cooperative effort for nations that had been setting up barriers between their economies for more than a decade.

They sought to create a system that would not only avoid the rigidity of previous international monetary systems, but would also address the lack of cooperation among the countries on those systems. The classic gold standard had been abandoned after World War I. In the interwar period, governments not only undertook competitive devaluations but also set up restrictive trade policies that worsened the Great Depression.

Those at Bretton Woods envisioned an international monetary system that would ensure exchange rate stability, prevent competitive devaluations, and promote economic growth. Although all participants agreed on the goals of the new system, plans to implement them differed. To reach a collective agreement was an enormous international undertaking. Preparation began more than two years before the conference, and financial experts held countless bilateral and multilateral meetings to arrive at a common approach. While the principal responsibility for international economic policy lies with the Treasury Department in the United States, the Federal Reserve participated by offering advice and counsel on the new system.1 The primary designers of the new system were John Maynard Keynes, adviser to the British Treasury, and Harry Dexter White, the chief international economist at the Treasury Department.

Keynes, one of the most influential economists of the time (and arguably still today), called for the creation of a large institution with the resources and authority to step in when imbalances occur. This approach was consistent with his belief that public institutions should be able to intervene in times of crises. The Keynes plan envisioned a global central bank called the Clearing Union. This bank would issue a new international currency, the “bancor,” which would be used to settle international imbalances. Keynes proposed raising funds of $26 million for the Clearing Union. Each country would receive a limited line of credit that would prevent it from running a balance of payments deficit, but each country would also be discouraged from running surpluses by having to remit excess bancor to the Clearing Union. The plan reflected Keynes’s concerns about the global postwar economy. He assumed the United States would experience another depression, causing other countries to run a balance-of-payments deficit and forcing them to choose between domestic stability and exchange rate stability.

White’s plan for a new institution was one of more limited powers and resources. It reflected the concerns that much of the financial resources of the Clearing Union envisioned by Keynes would be used to buy American goods, resulting in the United States holding the majority of bancor. White proposed a new monetary institution called the Stabilization Fund. Rather than issue a new currency, it would be funded with a finite pool of national currencies and gold of $5 million that would effectively limit the supply of reserve credit.

The plan adopted at Bretton Woods resembled the White plan with some concessions in response to Keynes’s concerns. A clause was added in case a country ran a balance of payments surplus and its currency became scarce in world trade. The fund could ration that currency and authorize limited imports from the surplus country. In addition, the total resources for the fund were raised from $5 million to $8.5 million.

The Mount Washington hotel in rural New Hampshire, meeting place of the Allied nations for the Bretton Woods Conference

The Mount Washington Hotel, White Mts., N.H. (Photo: Library of Congress, Prints & Photographs Division, Detroit Publishing Company Collection, LC-D4-19762)

The 730 delegates at Bretton Woods agreed to establish two new institutions. The International Monetary Fund (IMF) would monitor exchange rates and lend reserve currencies to nations with balance-of-payments deficits. The International Bank for Reconstruction and Development, now known as the World Bank Group, was responsible for providing financial assistance for the reconstruction after World War II and the economic development of less developed countries.

The IMF came into formal existence in December 1945, when its first twenty-nine member countries signed its Articles of AgreementOffsite link. The countries agreed to keep their currencies fixed but adjustable (within a 1 percent band) to the dollar, and the dollar was fixed to gold at $35 an ounce. To this day, when a country joins the IMF, it receives a quota based on its relative position in the world economy, which determines how much it contributes to the fund.

In 1958, the Bretton Woods system became fully functional as currencies became convertible. Countries settled international balances in dollars, and US dollars were convertible to gold at a fixed exchange rate of $35 an ounce. The United States had the responsibility of keeping the price of gold fixed and had to adjust the supply of dollars to maintain confidence in future gold convertibility. The Bretton Woods system was in place until persistent US balance-of-payments deficits led to foreign-held dollars exceeding the US gold stock, implying that the United States could not fulfill its obligation to redeem dollars for gold at the official price. In 1971, President Richard Nixon ended the dollar’s convertibility to gold.

 

Brian Twomey

A new international monetary system was forged by delegates from forty-four nations in Bretton Woods, New Hampshire, in July 1944. Delegates to the conference agreed to establish the International Monetary Fund and what became the World Bank Group. The system of currency convertibility that emerged from Bretton Woods lasted until 1971.

by Sandra Kollen Ghizoni, Federal Reserve Bank of Atlanta

The United Nations Monetary and Financial Conference was held in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire, where delegates from forty-four nations created a new international monetary system known as the Bretton Woods system. These countries saw the opportunity for a new international system after World War II that would draw on the lessons of the previous gold standards and the experience of the Great Depression and provide for postwar reconstruction. It was an unprecedented cooperative effort for nations that had been setting up barriers between their economies for more than a decade.

They sought to create a system that would not only avoid the rigidity of previous international monetary systems, but would also address the lack of cooperation among the countries on those systems. The classic gold standard had been abandoned after World War I. In the interwar period, governments not only undertook competitive devaluations but also set up restrictive trade policies that worsened the Great Depression.

Those at Bretton Woods envisioned an international monetary system that would ensure exchange rate stability, prevent competitive devaluations, and promote economic growth. Although all participants agreed on the goals of the new system, plans to implement them differed. To reach a collective agreement was an enormous international undertaking. Preparation began more than two years before the conference, and financial experts held countless bilateral and multilateral meetings to arrive at a common approach. While the principal responsibility for international economic policy lies with the Treasury Department in the United States, the Federal Reserve participated by offering advice and counsel on the new system.1 The primary designers of the new system were John Maynard Keynes, adviser to the British Treasury, and Harry Dexter White, the chief international economist at the Treasury Department.

Keynes, one of the most influential economists of the time (and arguably still today), called for the creation of a large institution with the resources and authority to step in when imbalances occur. This approach was consistent with his belief that public institutions should be able to intervene in times of crises. The Keynes plan envisioned a global central bank called the Clearing Union. This bank would issue a new international currency, the “bancor,” which would be used to settle international imbalances. Keynes proposed raising funds of $26 million for the Clearing Union. Each country would receive a limited line of credit that would prevent it from running a balance of payments deficit, but each country would also be discouraged from running surpluses by having to remit excess bancor to the Clearing Union. The plan reflected Keynes’s concerns about the global postwar economy. He assumed the United States would experience another depression, causing other countries to run a balance-of-payments deficit and forcing them to choose between domestic stability and exchange rate stability.

White’s plan for a new institution was one of more limited powers and resources. It reflected the concerns that much of the financial resources of the Clearing Union envisioned by Keynes would be used to buy American goods, resulting in the United States holding the majority of bancor. White proposed a new monetary institution called the Stabilization Fund. Rather than issue a new currency, it would be funded with a finite pool of national currencies and gold of $5 million that would effectively limit the supply of reserve credit.

The plan adopted at Bretton Woods resembled the White plan with some concessions in response to Keynes’s concerns. A clause was added in case a country ran a balance of payments surplus and its currency became scarce in world trade. The fund could ration that currency and authorize limited imports from the surplus country. In addition, the total resources for the fund were raised from $5 million to $8.5 million.

The Mount Washington hotel in rural New Hampshire, meeting place of the Allied nations for the Bretton Woods Conference

The Mount Washington Hotel, White Mts., N.H. (Photo: Library of Congress, Prints & Photographs Division, Detroit Publishing Company Collection, LC-D4-19762)

The 730 delegates at Bretton Woods agreed to establish two new institutions. The International Monetary Fund (IMF) would monitor exchange rates and lend reserve currencies to nations with balance-of-payments deficits. The International Bank for Reconstruction and Development, now known as the World Bank Group, was responsible for providing financial assistance for the reconstruction after World War II and the economic development of less developed countries.

The IMF came into formal existence in December 1945, when its first twenty-nine member countries signed its Articles of AgreementOffsite link. The countries agreed to keep their currencies fixed but adjustable (within a 1 percent band) to the dollar, and the dollar was fixed to gold at $35 an ounce. To this day, when a country joins the IMF, it receives a quota based on its relative position in the world economy, which determines how much it contributes to the fund.

In 1958, the Bretton Woods system became fully functional as currencies became convertible. Countries settled international balances in dollars, and US dollars were convertible to gold at a fixed exchange rate of $35 an ounce. The United States had the responsibility of keeping the price of gold fixed and had to adjust the supply of dollars to maintain confidence in future gold convertibility. The Bretton Woods system was in place until persistent US balance-of-payments deficits led to foreign-held dollars exceeding the US gold stock, implying that the United States could not fulfill its obligation to redeem dollars for gold at the official price. In 1971, President Richard Nixon ended the dollar’s convertibility to gold.

 

Brian Twomey

Monetary Stabilization September 1936

Monetary Stabilization; September 25, 1936
Declaration by the United States, the United Kingdom, and France effected by simultaneous announcements at Washington, London, and Paris September 25, 1936;(1) supplementary statement of intention by the Secretary of the Treasury October 13,1936 (2)

 

Department of the Treasury press releases September 25 and October 13, 1936; Department of State Treaty Information Bulletin No.- 84, September 1936, p. 15, and No. 85, October 1936, p. 17

STATEMENT OF SEPTEMBER 25 BY SECRETARY OF THE TREASURY HENRY MORGENTHAU, JR.

1. The Government of the United States, after consultation with the British Government and the French Government, joins with them in affirming a common desire to foster those conditions which safeguard peace and will best contribute to the restoration of order in international economic relations and to pursue a policy which will tend to promote prosperity in the world and to improve the standard of living of peoples.

2. The Government of the United States must, of course, in its policy toward international monetary relations take into full account the requirements of internal prosperity, as corresponding considerations will be taken into account by the Governments of France and Great Britain; it welcomes this opportunity to reaffirm its purpose to continue the policy which it has pursued in the course of recent years, one constant object of which is to maintain the greatest possible equilibrium in the system of international exchange and to avoid to the utmost extent the creation of any disturbance of that system by American monetary action. The Government of the United States shares with the Governments of France and Great Britain the conviction that the continuation of this two-fold policy will serve the general purpose which all the Governments should pursue.

3. The French Government informs the United States Government that, judging that the desired stability of the principal currencies cannot be insured on a solid basis except after the reestablishment of a lasting equilibrium between the various economic systems, it has decided with this object to propose to its Parliament the readjustment of its currency. The Government of the United States, as also the British Government, has welcomed this decision in the hope that it will establish more solid foundations for the stability of international economic relations. The United States Government, as also the British and French Governments, declares its intention to continue to use appropriate available resources so as to avoid as far as possible any disturbance of the basis of international exchange resulting from the proposed readjustment. It will arrange for such consultation for this purpose as may prove necessary with the other two Governments and their authorized agencies.

4. The Government of the United States is moreover convinced, as are also the Governments of France and Great Britain, that the success of the policy set forth above is linked with the development of international trade. In particular it attaches the greatest importance to action being taken without delay to relax progressively the present system of quotas and exchange controls with a view to their abolition.

5. The Government of the United States, in common with the Governments of France and Great Britain, desires and invites the cooperation of the other nations to realize the policy laid down in the present declaration. It trusts that no country will attempt to obtain an unreasonable competitive exchange advantage and thereby hamper the effort to restore more stable economic relations which it is the aim of the three Governments to promote.

STATEMENT OF OCTOBER 13 BY SECRETARY OF THE TREASURY HENRY MORGENTHAU, JR. .

Supplementing the announcements, made by him on January 31,(3) and February 1, 1934,(3) to the effect that the Treasury would buy gold, and on January 31, 1934,(4) referring to the sale of gold for export, the Secretary of the Treasury states that thereafter, and until, on 24 hours’ notice, this statement of intention may be revoked or altered. the United States will also sell gold for immediate export to, or earmark for the account of, the exchange equalization or stabilization funds of those countries whose funds likewise are offering to sell gold to the United States, provided such offerings of gold are at such rates and upon such terms and conditions as the Secretary may deem most advantageous to the public interest. The Secretary announces herewith, and will hereafter announce daily, the names of the foreign countries complying with the foregoing conditions. All such sales of gold will be made through the Federal Reserve Bank of New York, as fiscal agent of the United States, upon the following terms and conditions which the Secretary of the Treasury deems most advantageous to the public interest:

Sales of gold will be made at $35 per fine ounce, plus one-quarter percent handling charge, and sales and earmarking will be governed by the regulations issued under the Gold Reserve Act of 1934.

Notes:

(1) Sometimes referred to as the “tripartite gentlemen’s agreement” or “arrangement.” A statement by the Secretary of State, Cordell Hull, in a Department of State press release of Sept. 26, 1936, reads in part:

“Naturally, I am immensely gratified to see a vitally important step in the direction of stable monetary arrangements.

“The action of the Treasuries of the three Governments in making simultaneous and virtually identical statements of policy should greatly strengthen the prospect of stability in international exchange relationships. This should result in further strengthening the basic conditions of our domestic recovery. The declarations of policy amply provide for taking into account the full requirements of internal prosperity. This advance toward stability should also greatly facilitate the reduction of excessive phases of quota, exchange controls, and of other excessive impediments to commerce between nations, which themselves were partly caused by exchange uncertainties. For it has been apparent for a substantial time that progress toward stability and the reduction of barriers to commerce should go forward concurrently, or as nearly as possible, simultaneously. The step taken is in harmony with our reciprocity trade-agreements program, as it is an indispensable part of any program for full and stable business recovery.” Back

(2) The Secretary of the Treasury announced on the same day that the United Kingdom and France had complied with the conditions specified in his statement for the purchase of gold from the United States for immediate export or earmark. On Nov. 24, 1936, he announced that reciprocal arrangements had been made also with Belgium, the Netherlands, and Switzerland as a result of their adherence to the principles of the tripartite declaration of Sept. 25, 1936. Back

 

Brian Twomey

Tripartite Agreement September 1936

The Tripartite Agreement was an international monetary agreement entered into by the United StatesFrance, and Great Britain in September 1936 to stabilize their nations’ currencies both at home and in the international exchange markets.[1]

History

Following suspension of the gold standard by Great Britain in 1931 and the United States in 1933, a serious imbalance developed between their currencies and those of the gold bloc countries, particularly France. The devaluation of the dollar and the pound sterling raised import prices and lowered export prices in the United States and Great Britain.

In the United States and Great Britain sound money advocates were divided between those favoring reforms to stabilize the currency and others who called for an end to the gold standard and a managed currency.[2][3][4]

Agreement

The Tripartite Agreement was informal and provisional.[5] Subscribing nations agreed to refrain from competitive depreciation[6] to maintain currency values at existing levels, as long as that attempt did not interfere seriously with internal prosperity. France devalued its currency as part of the agreement. The remaining gold bloc nations, BelgiumSwitzerland and the Netherlands, also subscribed to the agreement.

Subscribing nations agreed to sell each other gold in the seller’s currency at a price agreed in advance.[7][8] The agreement stabilized exchange rates, ending the currency war of 1931 – 1936,[9] but failed to help the recovery of world trade.

 

Brian Twomey

USD Forecast V 16 EM and CNY and BRL

In the this post, forecasts, targets and weekly ranges for USD V MXN, RON, RUB, PHP, THB, TRY, BRL, MYR, PLN, SGD, CZK, HUF, ILS, INR, ZAR, CNY.

USD/CNY Close 6.9405. Overbought. Weekly range 6.9348 -6.8992. Target 6.8992. Must break 6.9704. Below 6.8636 targets 6.8280.

USD/BRL Close 3.9800, Deeply overbought. Short target 3.9230 then 3.8590. Must cross 3.8910. Weekly Range 3.8590 -3.9230. Below 3.8270 targets 3.7950.

USD/SGD Close 1.3773. Deeply overbought. Short target 1.3692 on break 1.3734. Weekly range 1.3692 -1.3776. Below 1.3650 targets 1.3608.

USD/CZK Close 23.1790. Short target 23.0156 on break 23.1488. Weekly Range 23.2820 – 23.0156. Break 22.8824 targets 22.7492.

USD/ILS Close 3.4939. Oversold. Short 3.4723 to target 3.5153. Weekly range 3.4293 -3.5153. Break 3.5583 targets 3.6013.

USD/INR Close 69.7000. Overbought. Short 70.0881 to target 69.6925. Weekly Range 70.4837 -69.6925. Break 69.2969 targets 68.9013.

USD/MYR Close 4.1575. Deeply overbought. Short target 4.1403 on break 4.1496. Weekly Range 4.1403 -4.1589. Break 4.1310 targets 4.1217.

USD/HUF Close 294.6400. Overbought. Short target 293.1945. Bonus short point 296.7659. Weekly Range 300.3375 -293.1945. Break 289.6230 targets 286.0515.

USD/THB Close 30.7150. Overbought. Short target 31.4329. Sell point 31.7613. Must cross 31.5971. Weekly range 32.0897 -31.4329. Break 31.1045 targets 30.7761.

USD/TRY Close 5.5611. Oversold. Good long point 5.5294 to target 5.5719. Weekly range 5.4021 -5.5719. Break 5.6568 targets 5.7417. Wide range Currency Pair.

USD/ZAR. Close 14.7885. Deeply overbought. Short target 14.5098 then 14.4134. Break 14.2206 targets 14.1242. Wide range currency pair.

USD/MXN. Close 19.3055. Severely overbought. Short target 19.2077 on break 19.2793. Weekly Range 19.3509 -19.2077. Break 19.1361 targets 19.0645.

USD/PLN. Close 3.8781. Deeply overbought. Short target 3.8431 on break 3.8676. Weekly range 3.8921 -3.8431.

USD/RON. Close. 4.2536. Neutral. Short 4.2697 to target 4.2464. Weekly range 4.2930 -4.2464. Break 4.2231 targets 4.1998.

USD/RUB. Close 65.2713. Overbought. Short target 64.7318 on break 65.0788. Weekly Range 66.1211 -64.7318. Break 64.0373 Targets 63.3427.

USD/PHP. Close 51.6500. weekly Range 51.4891 -51.9105. Break 51.4891 targets 51.0677. No thrills here

Brian Twomey

Currency Vs Economic Cycles

A full economic cycle, dating to the BOE as first central bank in 1694, is composed of 50 years, divided by 4 cycles of 12 1/2 years.
I call it the 4 quadrants. The 1st quadrant of 12/12 years represents prosperity and certain market Trends. Everyone makes money.
The 2nd quadrant represents corrections and / or market crashes. All crashes happen in 2nd quadrants.
The 3rd quadrant represents fairly range markets as corrections are over yet in preparation to 4th and most vital 4th quadrant.
Today’s markets and Economic cycles are in 4th quadrant, hit absolute perfect in 2008.
4th quadrants sees uncertain markets as today, uncertain economic experiments, govt debts never to repay and the 50 year period end.
Year 2019 represents 11th year to 12 1/2 and this period will end soon.
End means by tradition free float currencies are finished as a new market form will rule the day.
May mean currencies pegged to gold as happened many times in past market cycles, pegged to silver, Bretton woods 1% currency moves.
What;s certain is prosperity lies ahead, peace, no wars. Markets transition into 1st periods rather than crash based on past history.
Full Currency cycles are 9 year events. A full trend up or down, takes 9 years. Means 9 year up or down to include corrections.
That;s mini cycles of 4 at 2.25 years. But 9 and 12 1/2 economic cycle deviate by 3 1/2 years.
                 Brian Twomey

GBP/CHF and GBP/USD Historic Lows

GBPCHF only monthly close in 66 year history dating to January 1953 is 1.2180.
Currently trades below. Below 1.2180, a price doesn’t exist.
GBPUSD Last Monthly close at 1.2200 then 1.1853 was seen at the time of  the Plaza Accords in 1985 when G5 central banks engineered USD Higher.
1.2200 = Oct 1984, then 1.1853 December 1984. Below 1.1853 then 1.1307 January 1985. Lowest of lows during Plaza Accords was 1.09.
GBPUSD‘s straight down slide began at 1.3300’s in March.
When does Carney and the BOE intervene.
Against lowest of low BOE interest rates on record, hard to argue GBP can be lifted by Interest rates alone.
Just to normalize, GBPUSD must trade to minimum 1.2900’s, or 700 pips to offer how severe are current lows.
GBPCHF to normalize must trade to minimum 1.2800’s easily, that’s also 700 pips
    Brian Twomey

GBP/EUR Historic 66 Year Lows

GBPEUR began its trading life January 1953 at 2.6564 and today after a straight 66 year downtrend closed at 1.0970.
What remains in monthly averages is 1.0975 August 2017, 1.0896 January 2009 and 1.0877 March 2009.
The corollary to 1.0877 is EURGBP 0.9193, and 1.0896 = EURGBP 0.9177 and 1.0975 = EURGBP 0.9111.
EURGBP confirms the message to GBPEUR as EURGBP cannot trade long.
Vital to Brexit and economics is 50% of all trade passes between the UK and Europe.
GBPEUR to move higher must break 1.1244 to target easily 1.1352 and remains deeply oversold not only from 1.1244 but from every MA from 5 to 253 days and its 10 year average at 1.1977.
EURGBP sits deeply overbought from its break point at 0.8895 and overbought from its 10 year average at 0.8382.
EURGBP must trade only from the short side. Identified 66 year lowest of lows in GBPUSD, GBPCHF and GBPEUR yet the lows trade in extraordinary times under exceptional circumstance
                  Brian Twomey

DXY and Treasury Intervention

Last time US Treasury intervened in FX markets was March 2011, bought 1 billion JPY, sold usd.

Then Sept 2000 , bought 1.5 billion EUR.

 

Total 2 FX interventions since 1999, based on treasury Quarterly reports.

 

Speculation to Intervene on DXY is ridiculous.

intervention requires movements, non seen.

treasury doesn’t intervene on DXY as major reserve currency.

RBNZ last FX Intervention was 2013, 500 million to adjust NZD. Intervention policy = TWI deviation, Reserves and economic / trade threat.

RBA last fx intervention was crash 2008, Intervened 9 times Oct -Nov then Oct 2007 and Sept 2001.

RBA always announces intervention at 3rd of every month. Always Transacts in AUD.

SNB Threats threats, hardly intervenes. Last major FX Intervention was 2009 to allow EURCHF 1.2009 floor to fall.

BOE not yet sure here. Stay tuned. Basis to intervention is FX Reserves and Gold holdings. All decreased severely since January. Most holdings in premiere JPY, USD and EUR dropped precipitously. Great argument for intervention.

Much intervention in Money markets. Intervention is costly, never clear to results based on academic papers. New intervention is adjust daily and headline interest rates, less costly, guaranteed results. More to follow,