Inside the Currency Market: NZD/CAD

NZD/CAD

Bottoms 0.8556 and 0.8555. Why here. Because next range bottoms below 0.8553 and 0.8513. If 0.8513 breaks below then like NZD/USD, both pairs head far far lower. Price then literally goes into almsot free fall to offer what 0.8513 means. Overall for both pairs, ranges are very wide. But they are holding prices in small containment ranges.

Again prices trade at 5 year yields for all NZD pairs. Two small ranges exist. The first is a 45 pip range between 0.8599 -0.8553 then 0.8513 if 0.8553 breaks lower. Next range 0.8599 – 0.8644, 45 pip range. Note 45 pip ranges for both. But overbought sell point found at 0.8641.

Points to go higher must break at 0.8598, 0.8599, 0.8610, 0.8618, 0.8621, 0.8623, 0.8628 then 0.8634, 0.8641 sell point. Both points at 0.8598 and 0.8599 decides higher or lower, short or long. But obviously the curve is downsloping so shorts is the way. Should a market fluke occur at sell point at 0.8641 then 0.8652 and 0.8663 next. Its not expected as the range break is found at 0.8644. Note how fast prices move to the respective points and note also how the points are respected. Most important is currency prices at every pip is known, expected and perfectly calculated. Its a market that is absolutely perfect. not one pip can be manipulated. Its absolutely, positively impossible.

JPY cross pairs this week should see volatility, maybe those pairs will be our focus.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: NZD/USD

NZD/USD

The bottom found 0.6562. Bottom exactly 0.6562 and 0.6561. A break of 0.6561 must be seen to target 0.6530. Overbought sell point 0.6628. To get to 0.6628, 0.6596 and 0.6595 must break higher. Point 0.6596 is a range break. Overbought at 0.6628 is 2 pips before the next upper range break at 0.6630. Ranges are found either 0.6596 – 0.6530 or 0.6596 – 0.6630. Above 0.6596 then range is 34 pips. Below 0.6596, range is 66 pips.

Downsloping curve. Points 0.6595, 0.6596, 0.6605, 0.6611, 0.6614, 0.6618. To see 0.6630 then 0.6613 and 0.6614 must break higher. What’s driving NZD and all NZD pairs is the 5 year yield. Watch 0.6595 and 0.6596. What’s important about 0.6530 range point below. That point breaks then NZD heads far far lower. That’s the big point holding current small small ranges. 0.6595 and 0.6596 are line in the sand higher or lower. Overall its a sell rally strategy.

Brian Twomey Inside the Currency Market, btwomey.com

Inside the Currency Market: USD/JPY

USD/JPY

The historic USD/JPY picture from its 360.00 USD/JPY introduction after WW 2 is the story of a massive multi decade downtrend that saw its bottom at USD/JPY 76.00 in August and September 2011. USD/JPY 360 reversed as JPY/USD saw 0.0027 lows to today’s current price at 0.0080. The correction higher from USD/JPY 76.00 is now experiencing prices last seen in May 2002 when USD/JPY was 126.35. Prices are quoted in terms of monthly average closs. To offer context to the larger scenario, from USD/JPY 360.00 highs to 76.00 lows, the historic halfway point is located at roughly USD/JPY 218.00 and JPY/USD 0.0045. Historically from current USD/JPY 124’s is not a terrible location. What drove USD/JPY prices higher was the ride first on the short end of the USD yield curve at the 2 year yield then it gained speed when the Volatile 5 year yield was its sole driver. From a price perspective, when USD/JPY broke its 89.00 and 99.00 price points then 104.00’s and 105.00’s, the uptrend found supports and contined to current 124.00’s.

USD/JPY is a USD story as the DXY topped at 125’s in 2001 and embarked on a massive downtrend that saw 78.00 lows. to now current 97.34 in a historic retrace. The current story remains the same for USD as well as USD/JPY. Yellen raises Fed Funds, USD/JPY heads far higher and a renege or hesitation or delay will see USD drop like a rock because its way overbought. But current USD Yields are low, oversold and has poential to rise far higher to take USD/JPY far higher. The front end of the USD yield curve for example prices USD/JPY to easily head to 127.46 and 128.45.

From the JPY/USD side, BOJ QE is driving JPY lower. QE is not new in the larger historic monetary policy schemes of the BOJ and Japanese Governments since the early 1900’s. Japanese industry must export to earn profits but must import the goods to complete the manufacture of its products. Japan is not an oil producing nation so must import oil. Because Japan uses a special type of Sour Oil to drive its cars and economy, it shared a historic relationship with Iran as the world’s producer of Sour Oil. Sanctions hit Iran so Japan was forced to look to Saudi Arabia, United Arab Emirates, Qatar and Kuwait for its oil (EIA). When Fukisima hit, Japan was forced to increase its supply of oil imports. Due to Japan’s need to export, import oil and products for manufacture, the BOJ and Japanese Governments historically shared close close ties to Japanese industries that are more in line with outright partnerships. The famous and most powerful Ministry of International Trade and Industries was at the heart of directing, planning and financing all Japanese industry activities in trade. Today the agency is titled Ministry of Economy, Trade and Industry. The historic link of Japanese companies, Governments and BOJ policies has seen every economic policy derived since the 1900’s fall as a massive disaster. Every decade brings a new failed economic scheme. The last Japanese QE attempt in the 1980’s and 1990’s failed due to target of GDP but again it was the Tax increase just as today that failed the Japanese economy. The Japanese failed to realize then that money supplies go wildly out of contriol under QE so GDP was all over the board and never hit targets. Previous was Japanese Keiretsu systems and pre WW 2 was Zaibatsu. The term Zaibatsu means monopoly and were early Japanese holding companies operating in Japan with a history that dates to the 1600’s and operated long after the 1866 Meiji Restoration. When Japan’s new constituion was rewritten after WW 2, Keiretsu formed as the new Japanese model. Japanese companies now “linked” as the true term meaning for Keiretsu.

USD/JPY. Two vital points below holding USD/JPY. 122.50 and 121.92. As long as both hold, longs is the way. USD/JPY is overbought only in the middle section of the curve but short and long is a trend in its infancy. USD/JPY has potential to go far higher as top of the overbought peak is not seen until 127.77, 133.14 and 137.18.

From current 123.75, next above lies 123.90, 124.03, 124.18, 124.65, 124.70, 125.84 and 127.40. Below 123.46, 122.50 and 122.40, 122.31, 122.00, 121.92, 121.70, 120.91 and 120.60. Again two vital points below 122.50 and 121.92 are key to see USD/JPY higher. A break lower for both is just a larger correction. It doesn’t stop the uptrend but delays it. To offer context to below prices, Extreme buy points are found at 123.19, 122.88, 120.52 and 121.07. So points at 122.50 and 121.92 won’t break easily. Further, extreme sell points above are found at 124.78, 124.85, 125.99, 125.76. Its again just as seen in all currency pairs under our review, its a tight tight market. Long USD/JPY is the way.

Brian Twomey, Inside the Currency Market, btwomey.com