RBA board member John Edwards spoke the magic words last evening in regards to negative interest rates. The risk to exchange rates are higher particularly as AUD or EUR/Other pair. The assumption is negative rates work and central banks rely solely on negative rates as a standalone policy. But this is not the case as negative rates couples to stimulus in an apples to oranges monetary policy. As a standalone policy, negative rates has potential to act as the economic rebuild over time as intended but that also means exchange rates travel light years higher, particularly in the short term. Higher exchange rates is not what central banks wish at the moment. If stimulus is added to the negative rates equation then both policies fight against each other. If Yellen is on hold then stimulus V negative rates becomes ever more crystallized and markets become ever more data dependent under a laser beam watch to the central banks for direction. Massive statistical uncertainty exists in current prices and its driven exclusively by the central banks. Stimulus and negative rates holds exchange rates in small ranges and slow price grinds. My observation is this is the intent as central banks buy time to allow data improvement, or not.
I marked vital levels below, make the moves based these price points.
EUR/USD 1.1056, 1.0883.
AUD/USD 0.7131, 0.7130.
NZD/USD 0.6614, 0.6602. Watch this pair closely as prices are set to explode.
USD/JPY, Severely oversold from 119.00 and 117.00, set to correct higher. When USD/JPY runs, it moves. Now is the time to jump.
USD/CAD 1.3744 and 1.3746, always a good moving pair, good volatility. This pair makes money.
USD/CHF 0.9908, 1.0016 and 1.0255
EUR/JPY 123.98 and 129.86
GBP/JPY 154.19, 168.48
AUD/JPY 83.79, 84.56
NZD/JPY 73.84, 76.34
AUD/CAD 0.9798, 0.9523
NZD/CAD 0.9089, 0.9075 big supports
EUR/AUD 1.5680, 1.5509, 1.5265. Good volatility,
EUR/GBP 0.8097, 0.7983, 0.7624, 0.7546
CAD/ZAR 11.14 and 11.09 Risk On/ Risk Off is borderline in larger market price context.
Brian Twomey Inside the Currency Market, btwomey.com