MXN shorts from 16.3533 saw a 2489 pip drop. Longs from the first post either earned 100 pips or at worst broke even. The Bank of Mexico intervened last evening and changed the entire MXN structure. Readers and many long time friends know I am exact in many regards in terms of exact targets, exact range points, exact levels to trade, reversal points. Not only is a mistake or miss a rare day but the longevity to be exact spans years. My many models are all factored to be perfect to the exact pip. The MXN trade was a rare rare day and far beyond my control. I will continue the focus on MXN because its an extremely important component as a forward indicator and vital to the currency pair matrix.
With Non Farm Payrolls today, a larger focus in the days ahead by these analysts will be the question when or If Yellen raises Fed Funds. Fed Funds Effective rates finally achieved 0.14 and closed at 0.14 for 8 days since July 27. I stated many times before the Effective rate must continue its journey higher and much quicker in order for Yellen to raise. What dictates 0.14 is the relationship between the 1 year and 6 month yields. 0.35 on the 1 year minus 0.21 on the 6 month rate = 0.14. More important is the 6 month Forward Yield trades at 1.01 and 1.09 for the 90 day. What Forward yields imply is where the respective yield rates will trade in the designated time frame. The assumption is the 90 day yield will trade at 1.09 in 90 days and the 6 month at 1.01. The 90 day crossed the 6 month so an interesting vote of confidence in a rate hike.
EUR/USD. This forecast might be valid through Sunday night or until Saturday afternoon EST.
Bottom 1.0908. Forward line 1.1067. Range bottom 1.0728. The range supports in the 1.0600’s are many and clustered beginning at 1.0676. Range tops aren’t seen until 1.1200’s. Price broke below vital 1.0962. The target so far above is 1.1006 while the target below is the bottom point at 1.0908. As of this writing, price must remain below 1.0962 to target 1.0908.
Many more pairs will be posted. Many thank you’s to the many readers and sincere thank you’s to all at Fxstreet.net.
Brian Twomey Inside the Currency Market, btwomey.com