AUD and RBA

AUD and RBA

Just 2 days after the RBA delivers possible OCR Interest rate lower news, AUDUSD rises 64 pips from 0.7140 to 0.7202. All AUD pairs rose in tandem.

Explained by the rise is not rate cut news but short RBA interest rates dropped against an AUD rise. Such negative news especially an interest rate drop would normally see a dive in exchange rates but not as it applies to AUD.

Former RBA head Big Glenn Stevens and now highly capable Debelle operate under the assumption as stated in the recent RBA Minutes and many past Minutes, a lower OCR would assist in a lower AUD as has always been the RBA lower AUD preference.

The problem derives from AUD opposite correlations to RBA interest rates. Most nearest RBA maturities trade at 1.68 and experienced a severe drop since March persistent highs at 1.80.

Lower RBA interest rates also assisted in lower Australia commodities as evident form the RBA’s index of Commodity Prices. Big Glenn Stevens never understood and again from past Minutes why Commodity prices dropped yet AUD never followed but instead rose.

AUD exchange rates remain the outlier to interest rates and Commodities. Lower AUD comes when RBA raises interest rates but AUD Commodities rise as well. The big 3 to Australia’s economic health remains a persistent and multi year problem.

At some point higher AUD will ht economic news and possibly assist in a much lower AUD but to what satisfaction to please the RBA is unknown. Possibly a rare RBA Intervention is warranted to rightsize AUD’s Mis Correlations because as was highlighted in recent posts, AUD mis Correlations won’t rightsize itself and remains a multi mis price.

AUD High / Low Vital Break Points.

AUD/USD 0.7145 and overbought.

AUD/EUR 0.6309.

AUD/JPY 79.56 and overbought.

AUDCHF 0.7135 and overbought.

AUDCAD 0.9504 and overbought.

AUDNZD 1.0556 and slight overbought.

 

Brian Twomey

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FX Results Past 7 weeks

FX Results,  Past 7 weeks available pips Vs Actual Profit on 12 to 14 Currency Pairs per week.
Records exist for past 40 weeks, only 33 weeks remain to report.
Total available in perfectly traded market 20, 126 vs Actual 12, 928.
3804 available pips, Actual 1127
3195 available pips, Actual 1700’s
2942 available pips, Actual 1962
2311 available pips, Actual 1979
2094 available pips, Actual 1800’s
2404 available pips, Actual 2592
3376 available pips, Actual 1768
 this available 2263 Pips
                    Brain Twomey

FX Weekly Apr 13 -19

Fairly balanced week among all pairs. Big trades, GBPCAD, GBPUSD GBPNZD USDCAD, GBPCHF.
Worst EURCAD, EURAUD Expected /Available Pips below
GBPJPY 202 Pips
EURAUD 126
GBPCHF 211
EURUSD 151
GBPUSD 251
USDCAD 214
GBPCAD 272
CADJPY 156
GBPAUD 181
GBPNZD 229
EURNZD 177
                     Brian Twomey

FX Weekly Trade Results Apr 8 -12

April 8 – 12.

Total 3804 available pips, 12 currency pairs, 26 trades. As mentioned 3804 is extremely high however all market scenarios from elections, to brexit, to wars to North Korea missiles is fully factored. Total available pips is actually the result to where prices are located at week’s beginning. The 26 trades are fairly standard and accounts for longs and shorts in each currency pair. 2 way trades however are taken only when appropriate as we don’t nor does a need exist to gamble. We trade sure shots.

Weekly trades are paying roughly 2000 pips per week. In the last 8 or so weeks, the range was 1800 ish to 2300. The total record dates to last July 2018 and began with 35 trades, all different currency pairs for 4000 ish pips.

This week at 1127 was the lowest weekly pip count since at least in about 8 weeks. Overall as in past years, Models are perfect and derives from hard work and updates over the years.

The 12 currency pairs below are chosen and standard as best movers among the 28 G10 choices. Consideration to drop EUR/CAD in favor of NZD/CAD.

Entries and targets below, note the number of trades failed to trigger due to dull price movements.

GBPUSD 1.2911, 1.2942, Target 1.3025, not triggered. 1.3063, Target 1.3215, Actual 1.3063 -1.3122, +59 pips. 1.3215 target 1,.3094, not triggered.

GBPCHF 1.2812, 1.2837, Target 1.2990, not triggered. 1.3016, target 1.3220, actual 1.3016 -1.3146, +130 Pips. 1.3220, target 1.3068, not triggered.

GBPAUD 1.8113, 1.8135, Target 1.8313, Not triggered. 1.8335, target 1.8599, not triggered. 1.8599, target 1.8379, not triggered. 1.8335, target 1.8135, actual 1.8335 – 1.8247, +94.

GBPJPY 143.33, 143.78, target 144.68, not triggered. 145.15, target 146.94, actual 145.15 – 146.35 +120 pips. 146.94, Target 145.84, Not triggered.

USDCAD 1.3120, 1.3151, Target 1.3273, not triggered. 1.3425, 1.3454, Target 1.3310. Actual 1.3394 -1.3309, +85.

CADJPY 82.28, 82.49, Target 83.42. Not triggered. 83.52, Target 84.74, Actual 83.52 to 83.94, +42.

EURUSD 1.1166, 1.1204, target 1.1302, Actual 1.1211 -1.1314, +103 Pips.1.1319, Target 1.1432, not triggered.

GBPCAD 1.7246, Target 1.7335, Not triggered. 1.7644, 1.7599, target 1.7423. Actual 1.7519 -1.7426, +93.

GBPNZD 1.9436, 1.9404, Target 1.9261. Actual 1.9445- 1.9376, +69. 1.9244, Target 1.9180, Not triggered.

EURNZD 1.6767, Target 1.6698, Actual 1.6786 – 1.6714, +72 Pips 1.6675, Target 1.6574, Not triggered.

EURAUD 1.5714, 1.5742, Target 1.5856, Actual 1.5714 -1.5853, +139. 1.5942, Target 1.5899, Not triggered. 1.5885, Target 1.5828, Not triggered.

EURCAD 1.4949, 1.4971, Target 1.5035. Actual 1.4971 -1.5102. On weekly Instruction +64 pips. 1.5121, 1.5143, Target 1.5069. Actual and 1.5101 – 1.5044 Ongoing, +57

 

Brian Twomey

 

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

 

 

 

 

 

FX ASIA Significant MA’s

High / Low Break Points

USD/CNY 6.7542 Neutral

USD/HKD 7.8459 Neutral

USD/IDR 14274.5586 Oversold

USD/INR 69.95 Oversold

INR/EUR 0.0126 Overbought

USD/JPY 111.09 Overbought

USD/KRW 1130.7158 Overbought

USD/MYR 4.0950 Overbought

USD/PHP 52.55 Oversold

USD/THB 31.8859 Overbought

CNY/JPY 16.4524 Overbought

THB/JPY 3.4850 Neutral

USD/SGD 1.3571 Neutral

INR/CAD 0.0190 Overbought

MYR/CAD 0.3249 Neutral

 

Brian Twomey

AUD, NZD, EUR, USD FX and Interest Rates

AUD, NZD, EUR, USD FX and Interest Rates
RBA interest rates at top end Bank Bills at the 1 month monthly maturity current 1.86 hasn’t been seen since early November and the current drop is the result from 2.05 highs on January 3rd. A miraculous drop by RBA’s deeply range bound interest rate standards.
Now AUD is deeply converging against low low NZD then ultra low USD from a curve average perspective. Not many basis points separates USD V NZD V AUD yet both NZD and AUD trade in conventional positions above USD from a curve perspective but maturities trade below USD.
If AUD correlations remain off klter to interest rates and interest rates head higher then AUD is set for a deep drop.
Smart as usual is the RBNZ and clearly brilliant to see and adjust to any market storms. They automatically adjust rates to hold NZD in check.
The ECB and EUR as usual remains comatose as bottom maturity at -0.110 began a steady drop over last 5 weeks from -0.120 to support EUR yet its curve averages are skyrocket high against AUD, USD and NZD.
This forced EUR containment and ability to not break its major high / low break at today’s 1.1390.
USD curve averages are scary low against maturities miles high above counterparts EUR, AUD, NZD. Explains dead DXY and no relief in sight.
                 Brian Twomey

 

Daily FX Trade Methodology

 Thank you to my recent contact from South Africa for reminding me not to exclude my blog in all writings and trades. Thank you to all long time friends and readers as views are skyrocketing. Comments, questions, concerns then please feel free to contact brian@btwomey.com
My trusted friend, http://tantalumwatches.com  exquisite top brand name Watches, #watches, Pocket Watches, Rings, luxurious, please have a look, Brian Twomey
                 Daily FX Trade Methodology.
The 1970’s free float was a never before seen invention for central banks to base currency prices traded against interest rates.
My daily trade system is an exact replica to the original intent against latest central bank methodological interest rate changes.
Anytime central banks change methodologies, I adjust. Central banks offer daily no lose trades when interest rates are released but my system employs a mathematical overbought / oversold component as added feature as well as a vital break point level.
Support and resistance levels change daily and constantly move, sometimes much, sometimes little. I know daily from central banks where those levels are located.
Tops and bottoms are known from central banks and become targets.
EUR/USD today bottom 1.1227, GBP/USD 1,3026. AUD/USD Top today 0.7092, EUR/JPY 126.14.
Support, and resistance, tops and bottoms allows multiple longs and shorts per currency pair. Usually bout 50 pips per pair.
Bottoms are always well known and protected by central banks, its upside requires attention.
Gaps. Huge topic, must know as vital level found between exchange rate intervals. Ex EUR/USD 1.1238, EUR/JPY 125.08, AUD/USD 0.7028 and 0.7029. Gaps occur often but is little known. 
Interest rates apply to 1st position. USD for USDCAD, EUR to EUR/USD, EUR/JPY, EUR/AUD
                     Brian Twomey

 

EUR/NZD Weekly Trade Example

Most Entries are exact and very specific and hold true week after week over many months but what if an entry is wrong.
Here’s a weekly trade example. A Draw down? No, opportunity to add 1 lot to an off entry because I knew exactly where the target was located and I knew price was going directly to the target.
No such concept as draw down exists in trading as this is a misnomer. Target counts first then entry.
Why the specific entry I cannot explain but allow this:
EUR/NZD is a wide range currency pair. Readers would remember the 1.7800 to 1.7000’s trade months ago.
Weekly Strategy. EUR/NZD lacks a trend and long term target but rather it ranges weekly. This means EUR/NZD price is settled and settled prices are meant to leave alone but EUR/NZD ranges weekly 200 ish pips so can’t say no to this pair.
If I highlighted GBP/USD then the strategy would become long only until GBP/USD achieves 1.3700’s target.
As can be seen here, I maintain from calculations a deep simplicity to trades so anyone may understand. Entry then Target.
And as usual interested in trades then fell free to contact. For daily trades, 8 pairs are sent twice daily to cover 24 hour trades continuously from Sunday to Friday.
                  Brian Twomey

WEEKLY and LONG TERM TRADES

Weekly and Long term trades were offered to interested subscribers since last July 2018. Long term trades are defined as 3, 5, 8 and 1000 pips trades and targets. Targets hit absolutely perfect, even at 1 and 2 month trade duration. See last March / April on Fxstreet, 35 trades, never the same pairs hit for 4000 pips. Since, I offered many many long term trades on twitter and Linked In to show long term targets and to prove it can be done. The qualification to FX street trades was 150 pips or better or the trade wasn’t worth the time and effort.

Market conditions must be correct to offer 4 and 1000 pip trades. Except for AUD pairs, not many exist currently.

The model is not only perfect for long term trades but no stops needed, charts, graphs, Fibs. Whatever was previously written on currency trading, charts, graphs, market talk blah blah is all wrong. We have all been exposed to the greatest lies, fallacies, scams, losing trades that has ever been foisted on the trading public. I can prove my claims without a shadow of a doubt. The famous, the Currency Analysts,, leading traders and experts are proven dangerous, losers and should refrain from their losing actions. Jail for grand larceny, conspiracy, theft and destroyed lives is to kind for these crooks.

The chart, candle and fibs are the greatest limitations to traders because it limits their views and profit ability. All quantified and validated.

The model and trades to above claims also works perfectly to stock indices, commodities and any financial instrument on the planet. Again, proven by trades but also certified by my friend Peter Wadkins, a 47 year FX veteran, ACI licensed.

As long term trades weren’t available, I took the long term model to devise weekly trades. Weekly trades based on Sunday instructions earn roughly 2000 pips per week on 10 and 12 currency pairs. Certain weeks bit more than 2000, other weeks slightly less. But 2000 is a great average.

I’m currently gong back to all the weeks since July and finding 2000 weekly is really a good average.

And again, stops, charts, latest market blather is pablum and proven because the weekly trades are perfect. Entry and target is all that’s needed and voila, free money trades are here. And it is just that simple.

Daily interest rate trades are becoming less popular but they are equally perfect. And again certified by Peter Wadkins who also truly understands like me all nation’s interest rates and application to exchange rates and prices.

Multitudes, long term friends and followers surely know exactly what I have done. Putting this model together I assure readers took time and deep effort. We must understand before we can trade. Obviously, multitudes that don’t know me all must think I’m a loon but that’s okay too. They will fall into the hands of the losers and will be soon bounced from the market to earn a living by other means.

Brian Twomey

 

March Weekly Trade Results

FX Weekly Trade Results Weekly and Long term Models were built against excruciating detail and time and produces effortlessly 2000 ish weekly pips on 10 and 12 currency pairs. Results and reporting is honest and factual, certified by my friend Peter Wadkins. I’m trying to give wealth for interested for a pittance in return.
Daily interest rate trades represents extra pips.
GBPAUD 1.8356, Target 1.8672, actual 1.8356 – 1.8611, +255 Pips. 1.8672, Target 1.8145, actual 1.8356 -1.8274, +82 Pips, ongoing. Long 1.8145, target 1.8303, not triggered.
USDCAD 1.3311, Target 1.3163, actual 1.3311 – 1.3297, not triggered. 1.3163 , target 1.3274, not triggered. 1.3477, 1.3459, Target 1.3322, not triggered.
CADJPY 82.16, 82.35, Target 82.99, not triggered. 83.33, Target 84.48, actual 83.33 – 83.91, +58 Pips.
GBPNZD 1.9061, 1.9090, Target 1.9177, actual 1.9062 -1.9177, +115 Pips, 1.9207, Target 1.9351, actual 1.9207 – 1.9473, +144 on instruction
EURAUD 1.5805, Target 1.5910, actual 1.5712 -1.5877, +72 ? 1.5985, Target 1.5935, not triggered.
EURCAD 1.4969, Target 1.5087, actual 1.4905 – 1.5015, +46? Terrible performance
. . 3195 Pips available, 12 Currency pairs, 26 total Trades.
Last week for context 2942 Pips available, 12 Currency pairs, 24 Trades earned 1990 Pips.
Trades factored for contingencies to breaks at significant points. Actual 1685 Pips.
GBPUSD 1.2933 1.2886, Targets 1.3027, not triggered. 1.3074, Target 1.3238, Actual 1.3074 to 1.3195, +121 pips, 1.3238 target 1.3102, actual 1.3195 – 1.3102, +92 Total 213.
EURUSD 1.1215, 1.1183, Target 1.1313, actual 1.1183 -1.1153, +70, ongoing Target, week 2
GBPCHF 1.2843, 1.2873, Target 1.2982, Actual 1.2953 – 1.2982. not triggered. 1.3022, Target 1.3141, actual 1.3022 – 1.3173, +119, on instruction.
GBPCAD 1.7296, Target 1.7350, not triggered. 1.7404, Target 1.7620, Actual 1.7404 – 1.7614, + 210.
GBPJPY 143.57, 143.81, Target 144.77, not triggered. 145.02, Target 146.91, Actual 145.02 – 147.19, +189 on instruction.
                   Brian Twomey

DXY V CORN

DXY V CORN
DXY price at 97.21 is not only at upper range highs but warrants a deep correction.
Problem DXY is well supported at 95.92, 95.54, 95.39 then 94.34, 94.13.
Only a break at 94.13 would see a deeper move to 91.97 and 90.39.
Best DXY correction is located at 96.89 and 96.79 and lower is required to challenge 95.92, 95.54 and 95.39.
DXY ranges is located from 95.92 to 98.00’s but don’t push your luck at 98.00’s.
The best shorts on a sell only strategy is 98.62, 98.78 and 98.81 to target 96.89 and 96.79.
Short only strategy because DXY’s current price is to high and its impossible to trade long.
This short only condition in currency pairs and DXY in particular may last for many months and DXY is no different from the 28 majors.
Overall, DXY isn’t worth the trouble to consider a worthy trade.
DXY Vs Corn Correlations from monthly AVGS 1 to 5Y = 0.29, 0.02, 0.05, 0.02 and 23%.
From 5 to 10Y AVGS barely achieves 50% correlations.
DXY’s price is to high, Corn 356.62 price is to low.
Corn faces many hurdles to trade higher from 361.32, 369.36 and to 392.79.
Above 392.79 required to challenge 439.18, 467.41.
Good long located at 338.66, 341.88, 344.09, targets 350.07, 354.02.
Corn widest ranges: 320.00’s to 600.00’s and buy drops as 320.00’s is 36 points from bottoms.
   Brian Twomey

 

GBP and JPY Interest Rates and Yield Curves

GBP/USD UK and Japanese Interest Rates/ Yield Curves
UK Yield Curve / Interest Rates are established as the same system as the United States, Interest Rates below then Yields above Interest Rates.
Interest rates price yields. Today’s Sonia 0.7047, February month avg 0.7061, month averages released 19th every month.
Japanese are quite different. Tibor Interest rates positioned below Yields, Euroyen Tibor also positioned below yields.
Normally Euroyen are intertwined with Yen Tibor. The difference between onshore and offshore.Japanese overnight Call Rates however are negative -0.067 last evening or 0.933.
More work needs to complete this quick presentation regards to Japanese Interest rate system.
Tibor Overnight -0.01091 or 0.98
1m=0.0609
3m= 0.0690
6m= 0.1263
12m= 0.13636
Euroyen Tibor 1 week =0.00700
1M= 0.09200
3m= 0.0500
6m= 0.09500
12m = 0.15300 Yields.
   UK Yields
3m =0.831
2Y = 0.832
3Y =0.817
5Y = 0.806
10Y = 0.913
15Y= 0.167
20= 0.34
30y= 0.51. Read research this morning claims UK and Japanese Yield curves invert often. Not sure this statement
             Brian Twomey

 

Mueller Report

Mueller Report

The Trump Russia propaganda by Robert Mueller is considered an “Investigation”.

Investigations especially criminal derives from the Department of Justice under CFR 600 Regulations and considered private to protect witnesses, sources and methods, national security and Ethics.

CFR Regulations derives from the Ethics in Government Act. First is ACT / Law then Regulations drawn to define Laws.

The misnomer term is Special Counsel as Mueller isn’t a special counsel but a DOJ appointed Attorney to investigate Trump / Russia claims. If Mueller was actually a Special Counsel then 600.8 Regs mandates Mueller to write frequent reports to Congress.

Since Mueller isn’t a Special Counsel then no obligation exists for Mueller or the DOJ to release the final report to the public especially if national security or ethical standards exist. Attorney General Barr released a 4 page summary and cleared Trump. Barr is not obligated by CFR Regs to write 1 word nor is Barr obligated to write another word.

Because its a 2 year issue and involves a President, Barr had to write to clear Trump. The Democrats just voted and passed under the House Judiciary Committee to Subpoena the full Mueller Report and goes against the mandate of Ethics laws and CFR Regs. PR at work

 

Brian Twomey

Recent Linked IN Posts

3804 Available Pips, ridiculously high, 12 Currency Pairs, 28 Trades. High explained by contingency
Trades and Trend V Range Markets. low pip count = trades to Target vs Range, contingencies.
Available Pips below.
EURCAD Poor performer will Drop in favor NZDCAD, Good Carry Cross, margin, Movements.
EURAUD poor performer, must remain, Vital Currency Pair V AUDUSD and AUDEUR
GBPUSD 387 Pips
GBPCHF 534, High
GBPAUD 662, High
GBPJPY 434 High
USDCAD 260
CADJPY 236
EURUSD 249
GBPCAD 310
GBPNZD 239
EURNZD 170
EURAUD 185
EURCAD 138
   Brian Twomey
                 My trusted friend, http://tantalumwatches.com  exquisite top brand name Watches, #watches, Pocket Watches, Rings, luxurious, please have a look, Brian Twomey

The economy may be off the boil but don’t expect a US recession

Peter Wadkins

The Fed’s plan to cease trimming the balance sheet if the economy evolves “about as expected” and more cautious “dot plots” that hint the central bank may not hike again in 2019 has got bond traders chomping at the bit. Fixed income traders prior to this morning were projecting a cut in the Fed Funds rate in September, with another 25% chance of a second cut before year end.

Inversion of the US government bond yield curve out to the 5-year note has sparked talk of a recession and the FX market took that as a sign to dump the Dollar, at least for a while. Since then EUR/USD has plunged on the back of weak German data that was followed by soft EZ Mfg PMI (in contraction, 47.5) as well as lower than forecast CPI (1.4% y-on-y).

Cynics will point to this week’s soft US durable goods orders print but it’s a volatile series and the core data was flat, within 0.1% of market forecasts. (Non-defence capital orders ex-aircraft at -0.1% and durable goods ex- transportation +0.1%). The NY ISM was strong (66.9 vs 61.1 last) and as it was March data, gave a fresher view of the economy than February’s durable goods.

US Markit Mfg PMI was decent (52.4) and the US ISM Mfg PMI improved upon February’s 54.5 reading at 55.3. Furthermore, ISM’s prices paid index leapt from 50.1 to 54.3. Hardly signs of an impending recession, particularly with US construction spending +1.0% in February vs +0.2% forecast. Finally, today’s nonfarm payrolls data came in at 196k, 20k higher than forecast although wages ebbed to 3.2% y-on-y vs 3.4% market forecast. All in all the economy still looks healthy and there is a distinct lack of evidence (other than the yield curve inversion) to indicate a recession is in the offing.

The St Louis Fed’s GDP Now indicator was revised down on Monday to 1.7% for Q1 2019, off from Q4’s 2.2%, however Q1 is frequently one of the two weakest quarters of the year for economic growth. Over the past 20 years Q1 has been one of the two weakest quarters 60% of the time and the weakest quarter more frequently than any other quarter irrespective of the existing economic cycle (40% over the past 20 years).

The Fed’s Randal Quarles stated a week ago “My estimate of the neutral policy rate is north of where we are now” citing strong labor market conditions and improving productivity. Quarles is the vice chair for supervision and is no lightweight, so his view of the US economy is probably representative of the Fed’s leadership.

It’s a bit of a puzzle as to how negative the market has gotten on growth prospects and it mainly seems to be related to the Trump Administration’s heavy handed approach to international trade at the same time that growth in the European Union and China is ebbing. So we decided to do some research on how much impact slowing exports would have on the US economy

According to the World Bank, between 2012-2016 US exports contributed somewhere between 12-13.65% to US GDP and if you go further back that percentage drops. Out of all of the major economies and countries with the largest populations, only Japan comes close to the US economy’s low dependence on overseas demand. Japan’s goods and services exports were last estimated by the World Bank to contribute 16% to GDP.

The EZ comes in north of 44%, with Germany at 41% and France almost 31%. If world growth fizzles it’ll have the least impact on the US. China’s dependence on exports has ebbed to just below 20% but given the size of its population vs the US, in monetary terms they have a much higher reliance on exports than the US and have more to lose in a trade war.

Ironically, if trade negotiations remain at an impasse it’ll be American consumers that’ll suffer more than anyone as the price of imported goods raises domestic prices, yet another reason for the Fed not to lower rates. So if world growth dips, does that necessarily mean the US economy has to enter a recession? Less than 7.5% of US jobs are related to exports of goods and services of which less than 4.2% are in Asia and Europe (according to the International Trade Administration that tracks these things).

On the assumption a slide in international trade knocked exports down 10% (which would be a huge drop), assuming a one-for-one drop in goods and services jobs lost, the US economy would lose roughly 0.75% of the overall work force. However members of NAFTA and other FTA countries would be somewhat insulated and services exports tend to be less sensitive than goods to downturns in international trade volumes. As many of the US exports to the Caribbean, South and Central America are somewhat inelastic (as are exports to the Middle East) the probability is the net effect of a 10% drop in US exports on US domestic employment would likely be 0.5% or less.

The conclusion one draws from the above is that unless there is an exogenous shock to the US economy that seriously impacts financial markets and consequently the availability of credit to businesses and consumers that constrains future spending, the likelihood of a recession is a lot less than the market believes.

In reality the negative yield curve has more to do with a world awash with liquidity desperately seeking yield, particularly with 10-year Bund yields straddling “0%” again.

There are however two real threats to US economic growth, firstly the contentious relationship between the Administration and the Democratic Party leadership which threatens the 2020 budget negotiations and the extension of the US Treasury’s debt ceiling. The wild card here it seems will be how far does the schism damage US growth prospects in the event of either another government shutdown or the ability of the federal government to fund itself?

The other risk is President Trump’s threat to shut down the border with Mexico which he seems to have back pedaled from as it would be extremely disruptive to the US auto industry and auto parts supplies. Private economists estimate such action would lop some 0.4% off GDP, however that would still not throw the economy into recession.

Providing the above negotiations do not boil over and damage economic prospects, continued low US yields will sustain demand for real estate and underpin US equity values. which should support private spending patterns and and GDP. Fed staffers are projecting US GDP at 2.1% this year and 1.9% in 2020. Private forecasters are a little more optimistic and are looking around 2.5% for 2019. The Fed is unlikely to cut rates in such an environment and as the ECB continues to add to its balance sheet, albeit at a slower pace, whilst the Fed is in the process of slashing another $220-255bn off its balance sheet, divergent monetary policy should continue to cap EUR/USD advances.

DXY V Corn: Levels, Ranges, Targets

 

DXY price at 97.21 is not only at uppermost range highs but it warrants a deep correction. Problem with correction is DXY is well supported at 95.92, 95.54, 95.39 then 94.34 and 94.13. Only a break at 94.13 would see a deeper move lower to 91.97 and 90.39.

Best DXY correction is located at 96.89 and 96.79 and lower is required to challenge 95.92, 95.54 and 95.39. Overall, DXY ranges is located from 95.92 to 98.00’s but don’t push your luck at 98.00’s.

The best shorts on a sell only strategy is 98.62, 98.78 and 98.81 to target 96.89 and 96.79. Short only strategy because DXY’s current price is to high and its impossible to trade long. This short only condition in currency pairs and DXY in particular may last for many many months and DXY is no different from the 28 major pairs.

Overall, DXY isn’t worth the trouble to even consider a worthy trade as far more better pairs exist to consider. GBP for example is currently running on all cylinders and all GBP pairs are great considerations.

DXY Vs Corn Correlations from monthly averages 1 to 5Y as follows: 0.29, 0.02, 0.05, 0.02 and 23%. From 5 to 10 year averages barely achieves 50% correlations. While DXY’s price is to high, Corn’s 356.62 price is to low but Corn faces many hurdles to travel higher from 361.32, 364.45, 369.36 and up to 392.79.

Above 392.79 is required to challenge 439.18 and 467.41.

Ther perfect long point is located at 338.66, 341.88 and 344.09 to target 350.07 and 354.02. Overall, Corn contains its widest ranges from 320.00’s to 600.00’s and the overall strategy is buy drops as 320.00’s is only 36 points from range bottoms.

 

Brian Twomey

Selected Interest Rates: A Summary

The key to all financial market prices to include exchange rates are interest rates. Interest rates today are dictated by respective national rates as many nations not only left libor but Libor is slated for elimination by end 2019. Every nation is now responsible for the price of their own financial instruments set by interest rates. USD interest rates by trading in its own markets for example prices USD exchange rates, stock indices, USD Gold and Silver and commodities priced in USD.

Every nation views and trades its own interest rates in a unique manner and this is why to report an overnight interest rate alone such as Europe’s Eonia is not enough to understand if interest rates overall are to high, to low, range or will trade to an intended target. A complement of national interest rates must be known in order to trade a respective nation’s financial instruments. Its a large body of knowledge yet interest rate trade to financial instruments is what the 1972 free float currency was intended.

Certain nations allow interest rate markets to move and Canada is the last holdout in relation to its counterpart nations while CHF interest rates trade in small channels.

BRL, SEK, NOK, MXN, ZAR and PLN normally trade in wide channels due to the wide channel prices of respective interest rates. Wide channel means the central banks force financial instruments to move. For INR, JPY, MYR, AUD, NZD trade in smaller channels while GBP is fast approaching interest rate trade in small channels. GBP matched CAD as the best open trade of interest rates but under Sonia changes, GBP, Brexit aside, is losing its status as consideration to open markets.

Viewed from the complement of interest rates per nation is actually the true yield curve as interest rates prices government securities. Interest rates also price FX Forward exchange rates.

An interest rate as it applies to financial instruments represents a support or resistance point and range trades as it applies to trade between interest rates. Trading interest rates to exchange rates and other financial instruments is the true manner to trade as all relevant information from support, resistance, target and range is known.

The key is to trade the correct financial instruments at the correct central banks interest rate release time otherwise traders will trade a non existent price. Certain central banks are wide open to view interest rates while other central banks are adept to hide interest rates. Certain central banks BOE and Sonia for example now force payment to receive interest rates. Smart traders understand how to price GBP in USD or another interest rate to maintain true GBP prices.

Every market price on the planet is highly influenced and complemented by USD interest rates. But its the world order to release times that allows USD to become pre eminent. After USD afternoon release times, NZD, AUD, JPY, CHF, GBP then EUR and CAD dominant the 24 hour market cycle. Afer NZD and AUD, all Asia nations then price interest rates from either NZD and AUD or straight from USD. What governs nations to either price in USD or NZD is times of trade in open markets and more importantly today is balance of trade between nations.

Historically, 3 month interest rate T Bills was predominant trade to finance governments in Hoover’s 1928 market crash then interest rates as known today began trade in the 1960’s.

Below is a partial list of the most vital interest rates in each nation and today’s rates. Most vital to the list as Libor eliminated is interest rates suffer severely from compression nation to nation. This means overall interest rate numbers per nation contain small distances and this compression solidifies low volatility price movements.

AUD. OCR 1.50 3 month 1.82. 3 month OIS 1.45.

NZD. OCR 1.75 3 month 1.88.

EUR. -0.368, 3 Month -0.314 or 0.632 and 0.686.

USD. Overnight 2.40, 3 Month Non Financial Commercial Paper 2.51. 3 Month Financial Commercial paper 2.60. 3 Month T Bills 2.41 and 3 Month Constant Maturity 2.46.

CAD. Corra 1.7375, Money Market Finance Rate 1.7484.

CHF. Saron -0.743. Call Money Rate, Tom Next -0.970. Debt Register Claims -0.781. 3 Month Libor -0.716.

Sweden. Repo Rates. Headline -0.25, 3 Month Stibor -0.024. Reference rate -0.50. Or 0.75, 0.976 and 0.50.

GBP. Overnight Sonia 0.705. 3 Month most vital Sonia and Repo rates by subscription.

Norway. Key Policy rate 0.75. Nowa Overnight Rate 0.74. 3 month T Bills 1.07.

JPY. Overnight Call Rates -0.059. Max traded 0.001, Minimum -0.086.

Brazil. Selic rate 6.50. DI rates 1 day 83.59. Brazil trades USD onshore and offshore interest rates as well as USD spreads, a true currency as intended from the 1972 free float.

MXN. Target Rate 8.25. Tie rate 91 day 8.52. 91 day Cetes rate 8.09.

ZAR. Sabor Repo Rate 6.74.

PLN. . Reference Rate 1.50. Deposit Rate 0.50.

INR. Policy Rate 6.25. Reverse Repo rate 6.00. Bank Rate 6.50.

MYR. Overnight Rate 3.25. 1 week rate 3.29. Bank Negara just instituted USD Swap rates.

 

Brian Twomey

 

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Weekly Trades Mar 17 – 22

 

This Week FX Trades  2311 Pips available, 13 Currency pairs in a perfectly traded Market. Last week + 2500 ish, 2 weeks ago 1768 pips.

NZDCAD was offered this week,  Here’s expected pips per pair for the week.

GBPJPY 274

GBPAUD 330

GBPCAD 321

GBPUSD 182

GBPCHF 131

GBPNZD 170

USDCAD 192

NZDCAD 127

EURUSD 85

EURAUD 37 and 75

EURNZD 139

EURCAD 64 and 66

CADJPY 217

USDJPY 102

 

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Brian Twomey

 

PETER WADKINS

I’m not only honored for my 15 year friendship with Peter Wadkins, now in his 46th year in FX but Peter begins a new chapter as his own FX Consulting company just formed. A website will materialize shortly. Not only is Peter’s FX and market knowledge extensive but Peter’s FX writings are clear, crisp, knowledgeable. Peter contains a certain style to deliver brilliant market messages for all to understand. As an independent and just retired from 12 years at Thomson Reuters writing, Peter will again deliver the most brilliant commentaries. I guess the word for me and Peter in days ahead is collaboration as Peter has known me, my writings, FX and other trades as well as a monitor to my own 16 years of FX growth.

Peter’s profile. https://www.linkedin.com/in/peter-wadkins-103a463/

 

 

 

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