Diplomat Expulsions and Obama

Diplomatic Diplomacy and Expulsions

The interesting question to Obama’s order to Expulsion of 35 Russian Diplomats under Persona Non Grata status is the refusal by Russia to comply with the order. Refusal to comply sets the stage for a first in history legal challenge under long held diplomatic laws governing world diplomacy by the United Nations in the April 1961 Vienna Convention on Diplomatic Relations and concluded in May 1969. The Vienna Convention is essentially a treaty therefore all  nations including Russia as a signatory are subject to its laws and mandates.
Persona Non Grata status is considered the highest form of diplomatic censure and applied to persons of foreign governments as a declaration of “unwelcome” and non appreciative of committed actions while in a host state. In the Latin Personae Non Gratae, the Vienna Convention section 9 governs international laws of expulsion to include not only Diplomats but diplomatic personnel. The key word in Diplomat is embassies and consulates personnel are covered while UN diplomats and personnel are excluded. As applied to right under laws, a president can expel anytime, any person without explanation in a time frame given by the president. In the case of the Russian diplomats, Obama gave 35 Russian personnel 72 hours to leave as 72 hours is customary.
Failure to comply with an order of expulsion falls under the Vienna Convention’s Article 2 and is silent on the matter of refusal. The United States under the Office of Legal Counsel in the late 1970’s to address the Iranian hostage crisis interprets refusal to comply as an ability to use force such as the Secretary of State to revoke Visas in order to push out a diplomat or personnel. By Visa revocation, persons are not subject to the 1952 Immigration and Nationality Act to remain in country and fight to challenge an expulsion order in United States courts. Expulsions were never challenged except to declare immunity for judicial prosecutions yet failed under Baiz 135, US 403 in 1890 and Carerra V Carerra DC Circuit 1910.
An expulsion order by a host government must state specific person or persons and it means the host government fails to recognize that person as representative of a visiting government to do business, advocate or communicate with the host government. Persona Non Grata simply declares the person as non existent.
Failure to comply declares the person without rights as an alien non resident and clashes with Vienna’s article 29 as a person “under a diplomtic agent is inviolable and not subject to arrest or detention.” An Expulsion order rescinds Diplomatic Immunity status and questions the concept of arrest and detention if a law is violated especially as it relates to the question of “restraint”. The United States position is restraint is required if a United States citizen or property is harmed or in danger. Article 41 however states and traditionally understood by Diplomats and persons is in order to be received by the host nation, following national host nation laws is a given to maintain good graces of diplomatic status.
Attendant to this argument is the Russians must comply with an expulsion order by stripping persons of diplomatic status. Traditionally, diplomatic status was automatically rescinded by the sending state without question or argument and persons subject to expul;ion orders departed to home nations. A president under the privledges and Immunities clause must follow an expulsion order to its final conclusion as part of the exclusive responsibilities to conduct foreign policy.
The only ability for Diplomats to fight an Expulsion order is to declare the wrong person was identified. The only option to stay for a person under an Expulsion order is to declare Political Asylum under the 1967 Protocols Relating to Status of Refugees, 19 UST.
An order of expulsion is the specific domain of the President and Executive Branch under Article 2, Section 3 of the Constitution to receive Ambassadors and other Public Ministers. Article 2, Section 3 was codified by Jones V US, 137 US 202, 212 in 1890 and Baker V Carr 369 US 186, 212 – 213 in 1962.

Traditional Expulsions were met with an equal number of Expulsion by the receiving nation in a tit for tat. So far, the Russians refused to engage in this activity nor has full Diplomatic Relations been rescinded. To nullify full Diplomatic relations, the Ambassador must be expelled under an equal Expulsion by the Russians of the American Ambassador.

Last time Expulsion orders received such media attention was in Ronald Reagan days when Russian spies were sent to the United States as Journalists because status as Journalists gave ability to freely roam the United States without traditional Diplomatic scrutiny. Legal challenges were never mounted when spies violated United States laws of Espionage and expelled.

 

Brian Twomey

 

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GBP/USD: Levels, Ranges, Targets

Yesterday’s GBP/USD 154 pip range was located from 1.2269 to 1.2115 and actual was 1.2272 to 1.2210 for 62 pips. GBP/USD must breaks were 1.2251 to target 1.2199 and above 1.2269 to target 1.2308, 1.2316 and the elusive 1.2339. GBP/USD broke 1.2251 and traveled 41 pips to 1.2210. Overnight GBP/USD spiked from 1.2210 to dead stop at 1.2308 and dead stopped at 1.2316.
Today’s GBP/USD range is located from 1.2296 to 1.2146 for 150 pip range and a drop of 4 pips from yesterday. The top rose 27 while the bottom jumped 31 pips. Bottom support rise causes the current jump in GBP/USD. The same phenomenon is seen in EUR/USD. What drives both is not EUR or GBP but its pure USD especially GBP/USD above 1.2296.
Above 1.2296 then 3 targets exist: again 1.2339, 1.2347 and 1.2359. Most crucial is 1.2359 because a break targets 1.2414. Don’t look for a 1.2359 break. Yet 1.2339 remains a vital break because it offers downside targets.
GBP/USD shorts must break 1.2296 but many and massive supports exist from 1.2280 to 1.2287. From 1.2280 to 1.2287 is untouchable until a 1.2280 break then targets become 1.2271, 1.2260 and 1.2253. Below 1.2253 then GBP/USD is clear to head back where it originated from 1.2218 to 1.2210. The supports from 1.2218 to 1.2210 as well are many and massive so the vicinity of 1.2218 target is just fine.

 

Brian Twomey, Inside the Currency Market, btwomey.com

GBP/USD: Levels, Ranges, Targets

GBP/USD’s 154 pip range today is located from 1.2269 to 1.2115. GBP/USD broke above its significant resistance point with supports holding GBP below at 1.2259, 1.2254 and 1.2251. The import to 1.2251 is a break opens the flood gates to 1.2199 and 1.2187.
Today is free trade day for GBP/USD with targets at 1.2316, 1.2328 and 1.2339. The significance of 1.2339 is today’s daily pip range plus a range break is located at 1.2346. A break of 1.2339 and 1.2346 opens the opposite flood gate higher to 1.2382. Caution at 1.2339. Only an out of sync news forecast would see 1.2339 break. Under normal market trading conditions and central bank price control, no way to see the break.

Its not politics driving the show, its economics then, now and in the future. The economic aspect is controlled through money markets to contain the exchange rate. I named the policy after George Kennan, ” containment”. Prior market practices such as Intervention are long gone.

 

Brian Twomey, Inside the Currency Market, btwomey.com

DXY: Levels, Ranges, Targets

DXY from the 103.24 close must cross 104.36 and 104.38 to travel higher to 105.33. Critical resistance points lie at 103.90, 104.07 then 104.36. Stiff resistance in the price path on the way higher are located from 103.71 to 103.78. Most important in the series is 103.90 because 103.82 is the monthly range top and viewed from Dec 3rd’s DXY V EUR/USD post.
Overall, DXY faces not only a vital break at 104.36 but a range top at 103.82. Higher for DXY at 103.82 and 104.36 places EUR/USD from the 1.0412 close at 103.54 and 1.0300. Why 1.0354 and 1.0300 is reliable as critical bottom levels is because both DXY and EUR/USD are moving together from daily pip range averages at 53 for EUR/USD and 52 for DXY. One pip higher for DXY translates to 1 pip lower for EUR/USD .
On the bottomside, critical break is located at 103.18 then the floodgates open to 102.65, 102.56, 102.21 and 102.12. The furthest bottoms are found on the Libor curve at 102.07 and 102.05. The base for DXY is built upon 101.18 and 99.63. At 102.65 places EUR/USD at 104.71. Only a break of 101.18 and 99.63 sets DXY on a sustained downtrend.
Overall range breaks are found at 105.33, 106.43 and 106.97. Above 106.97 then next comes 107.67.
Since October 11, the Fed no longer publishes Eurodollar rates therefore the USD Libor curve is the best alternative. Critical break point along this curve is located currently at 106.15. Overall, a break of above 104.36 and range point at 105.33 challenges 106.15. The commonalities in both curves is a vital break point at 103.71 and 103.74.
DXY is currently approaching not only critical levels and range tops but 104.36 is an important break to go higher.

 

Brian Twomey, Inside the Currency Market, btwomey.com

GBP/USD: Levels, Ranges, Targets

Yesterday’s GBP/USD 153 pip range was located from 1.2299 to 1.2146. Today’s overall range expands by 3 pips to 156 pips from 1.2317 to 1.2161. Topside rose by 18 and bottom rose by 15 pips.
Yesterday’s topside sell points were 1.2280, 1.2286, 1.2290 and most important 1.2299. GBP/USD hit 1.2296 and reversed to 1.2223. Yesterday mentioned 1.2200 to 1.2224 contained many and solid supports. The performance in GBP/USD was trade inside its 1.2299 to 1.2224 ranges. Now its at bottom range from the topside failure.
Bottom points today are solid and many beginning with 1.2206 to 1.2230. From 1.2206 next comes 1.2215, 1.2226, 1.2230, and 1.2233. Most vital in this series is 1.2226 and 1.2230 because both are range points contained inside GBP as well as USD.
Longs for today must break above 1.2230 to then range from 1.2230 to 1.2286 with target and must break at 1.2256. Topside points begin at 1.2289 then 1.2299 again and 1.2303 and 1.2308.

 

Brian Twomey, Inside the Currency Market, btwomey.com

GBP/USD: Levels, Ranges, Targets

To head higher, GBP/USD must break 1.2280, 1.2286, 1.2290 and most important 1.2299. Then GBP begins to target 1.2339 and further out 1.2348 and 1.2359. The overall range for today is located from 1.2299 to 1.2146 for 153 pips. Despite what appears to be an impressive 153 pip range, GBP has ability to travel but not the will as the central bankers continue to stop currency price movements.
In this new period of central bank tight controls, the question must be addressed: are currency prices into a De Facto type of Gold Standard and what will the future look like for the currency price. Will standard indicators pass muster as a trade indicator or will adoption of a specialized math formula be required. Finalization for GBP will be determined February 2017 but if present circumstances are any indication, the finalized report will only confirm what central banks implemented as market practice since June 2016. GBP is vital in the overall scheme because many, many currency pairs were designed and trade under the GBP methodologies to include AUD, NZD and CAD as just a few exmples. If the main pairs are controlled then cross pairs are equally affected. Early assumption is the future will be all about cross pair trading to earn the daily pips.
GBP/USD on the bottom side is actually contained from both USD and GBP from 1.2200 to 1.2224 alonside many levels in between from 1.2205 to 1.2218. GBP to head lower must break 1.2280, 1.2271 , 1.2247 and 1.2235 then a shot to 1.2224 exists where we reverse long.
Viewed from range breaks, GBP breaks are located from below 1.1985 and above at 1.2475 and 1.2722. Most important break in between to go significantly higher is 1.2658.

 

Brian Twomey, Inside the Currency Market, btwomey.com

NZD/USD: Levels, Ranges, Targets

The overall 0.6962 to 0.6821 range this week for NZD/USD trades inside 141 pips and surpasses by 18 pips the 123 pip AUD/USD range. Despite the full 141 pip range, breaks at 0.6946 and 0.6845 cut the short term range to about 100. pips.

Most significant below at 0.6845 and above 0.6946 would allow NZD a further move up or down upon breaks. NZD below 0.6845 finds supports at 0.6839, 0.6932, 0.6824 and bottom break at 0.6821. Above 0.6946, the road is clear to 0.6962.

Longer term, 0.6962 remains highly oversold from the main break point at 0.7071. Higher for NZD must break 0.7071. Until 0.7071 breaks then any rises in NZD are results of corrections from oversold conditions. NZD/USD’s price is low yet its balanced V USD. USD/NZD trades at about 1.4501 and a range break isn;t seen until 1.3995 below and 1.5025 above and translates to NZD/USD 0.6655 and 0.7145. NZD/USD ranges 141 pips inside USD. Both NZD and USD are close to top of the range.

 

Brian Twomey, Inside the Currency Market, btwomey.com

 

 

AUD/USD: Levels, Ranges, Targets

Friday AUD/USD Futures contracts traded 55.400 or USD 277 billion and Open Interest runs USD 46 billion. Overall, 55,00 contracts is quite low since the 168,000 experienced December 15 at Contract expiration and rollover to March 17. Further 55,000 is the lowest traded since before November 22. OCR volume in comparison December 16 traded 6,098 million in Australian dollars. Thursday December 22, OCR traded 4,061.
Important developments upcoming for Australia is a continued study to revamp interest rates and consistent with the vast majority of central banks whose interest rates were overhauled and currently trade under new systems. The second aspect is Australia and New Zealand interest rates will begin to trade across borders, consistent with Europe’s Eonia for example. Currently, Australia and New Zealand trade about 200 billion per month in Australia and New Zealand Interest rate and interest rate derivatives.
Two significant break points for AUD/USD are located at 0.7092 below and 0.7215 above inside a 123 pip range. Above 0.7215 then next vital levels are found at 0.7222, 0.7228, 0.7230 and the top at 0.7248. At 0.7092 supports and vital levels are located at 0.7095, 0.7090, 0.7080 then a break of 0.7080 next comes 0.7061.
AUD/USD is not only oversold but the current price at 0.7169 is extraordinarily low. And extraordinarily low means current to long end of the price curve. Short term, AUD/USD struggles Vs USD for dominance and its the aspect containing significant AUD/USD moves. Longer term, USD is at severe tops but short term its price is low.

Why Australia OCR and AUD/USD exchange rate lack Correlation at the 1 and 2 month monthly averages are based on the short AUD/USD ranges and struggles against USD. The lack of Correlation and AUD struggles V USD led to an AUD/USD price and OCR at severe misalignment. The AUD/USD price should be far higher but the internal struggles forces short range trading and subject to outside Australia market influences.
An important break point for on the way higher for AUD/USD is 0.7205. A break and hold would lend much confidence in a higher AUD/USD price.

 

Brian Twomey, Inside the Currency Market, btwomey.com

 

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https://www.amazon.com/Using-Foreign-Exchange-Financial-Instruments-ebook/dp/B00AQKMBGK

EUR/USD V USD/EUR: Levels, Ranges, Targets

EUR/USD range in the last 5 hours traded 27 pips between 1.0436 to 1.0463. Why the short range is because EUR/USD traded between USD/EUR 1.0419 to 1.0472.
The higher or lower for today’s EUR/USD is found at USD/EUR 1.0419 and 1.0472. Above 1.0472 then EUR/USD runs on its own terms to target 1.0485 and overall target at 1.0501. EUR/USD achieves its target destination by a break at EUR/USD 1.0453, then 1.0472, 1.0485 and 1.0501. If a violation above 1.0501 occurred then EUR/USD 1.0504 and USD/EUR 1.0519 stops any further upward progression.

A violation of a target price is an important commentary in currency trading because it means either an interest rate was off by a basis point or the markets warns EUR/USD is heading higher in days ahead. Note targets and levels today are working on odd and even. Some days prices work on all odd or all even. Today’s range for exampole was 1.0436 V 1.0463, odd and even.
Yesterdy EUR/USD was favored by 53 V 49 USD/EUR daily pips. Today, both sides are well balanced at 53 pips each.
EUR/USD bottom today is located at 1.0396 but massive supports exists at EUR/USD 1.0450 and USD/EUR 1.0446. Both must break to target 1.0419 and the commonality for USD/EUR and EUR/USD at 1.0415. Then progression down begins to target 1.0411, 1.0404, 1.0401 and most important 1.0396. Below 1.0396 then USD/EUR stops downward moves at 1.0384.
The larger range for today is found from 1.0501 to 1.0396, 105 pip range. Why the commentary rgarding violation at 1 pip is a range break therefore range breaks hold more importance than an everyday traded level and a target.
The strategy is long on the lows and sell the tops with views at tops 1.0485 and 1.0501.
To many friends, followers and Fxstreet insiders, Please respectfully allow wishes of Merry Christmas, happy Hanukkah, Happy holidays to all and with all good fortunes and blessings of life.

 

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD V USD/EUR: Levels, Ranges, Targets

Most significant point in EUR/USD today is 1.0491 top because it corresponds to USD/EUR bottom at 1.0490 and a difference of 1 pip. If EUR/USD trades above the 1.0491 levels then USD/EUR must break its bottom. For today, both pairs then leave respective normal ranges, given to today’s market by the central banks. USD/EUR holds EUR/USD movements as it trades its daily average at 49 pips while EUR/USD has ability to travel 53 pips. My target and written was set at 1.0465 and EUR/USD dead stopped at 1.0469 then reversed.
EUR/USD on its own volition struggles with the long end of its price curve and is as much a factor in EUR/USD as much as USD/EUR. The significant break point for USD/EUR translates to EUR/USD at 1.0371. EUR/USD most vital break point is located at 1.0601 then EUR/USD runs into the top price point and brick wall at USD/EUR at 1.0630. What struggles mean for EUR/USD is downside price is contained but contained by USD rather than EUR.
USD/EUR significance at 1.0371 experiences solid support points to translate at EUR/USD 1.0393, 1.0391 and 1.0384. USD/EUR offers further supports translated to EUR/USD at 1.0373, 1.0361 an 1.0347. The commonalities in EUR/USD and USD/EUR is both align at 1.0373 and 1.0374. To see 1.0300 lows then breaks must be seen at USD/EUR at 1.0409, 1.0404 then EUR/USD at 1.0400.
Above EUR/USD at 1.0491 and USD/EUR 1.0490 then next breaks are located at USD/EUR translated to EUR/USD at 1.0508 and 1.0521. EUR/USD break points are located at 1.0532 and 1.0536.
Beside today’s levels and significant points, range breaks for EUR/USD are located at USD/EUR 1.0689, 1.0630, 1.0249 and 1.0192. EUR/USD range breaks are located at 1.0685, 1.0719 and 1.0727. The commonality is found at 1.0685. For today, EUR/USD overall range is located from 1.0371 to 1.0601 and represent levels traded for this day because range breaks are quite far away. To look further at EUR/USD range break below then its found at 1.0194 and corresponds to USD/EUR at 1.0192. . Until a range break is seen then EUR/USD and USD/EUR are just trading around levels everyday.

Brian Twomey, Inside the Currency Market, btwomey.com

 

 

 

EUR/USD: Levels, Ranges, Targets

EUR/USD Futures contracts expired Dec 16 and rolled into current March 17. December 15 traded 609,000 contracts for USD 3 trillion. Friday December 16 dropped to  289,000 contracts at 1.4 trillion. EUR/USD enters this day at 158,000 contracts at 794 billion and 2.3 trillion in Open Interest. 158, 000 contracts sits just above the 152,000 lows from December 17 and the 2nd lowest since November 17. Overall, the liquidity issue is just fine as always. Part of the myths of currency trading is a price may run to an unknown destination due to liquidity issues. This is a myth since every point traded is known far in advance and especially today in the world of the tightly controlled price by the central banks.

Current EUR/USD is built upon a base at 1.0118 with supports just above at 1.0219, 1.0225 and 1.0269. Today’s target is located at 1.0392, what lies just ahead is 1.0417 and 1.0423. Bottoms for today’s EUR/USD are located at 1.0320 and 1.0332. To see bottoms then EUR/USD must break 1.0351. The big line break and level driving current EUR/USD is 1.0550. A break targets 1.0665. The road to 1.0550 today is found at 1.0423, 1.0449, 1.0484.

 

Brian Twomey, Inside the Currency Market, btwomy.com

 

USD/JPY and Overnight Call Rates.

Japanese Overnight Call rates traded 0.963 Friday and 0.964 Monday. Viewed from the negative side, Monday traded minus 0.036 and minus 0.037 Friday. Monday’s range was minus 0.070 to + 0.001 or 0.93 lows to 1.001 highs. Why the BOJ decision to go negative the Call Rate is to borrow low and lend high by positioning the Call Rate below complementary interest rate maturities. Yen Tibor trades from 1 week to 1 year from 1.0090 to 1.1280. On the JPY offshore side, Euroyen rates trade from 1 week to 1 year from 1.0090 to 1.1240. Euroyen traditionally since its 1998 inception trades below Yen Tibor for purposes of not only investments off shore Japan but for purposes to repatriation. Repatriations are done  at the start of Japanese market opens. Why the up pattern at Japanese market opens is a factor to reinvest repatriation proceeds. Once repatriations are completed, down goes Japanese markets.

The location of Yen Tibor is above Europe’s Eonia but below UK Sonia and Fed Funds. Euroyen trades above Europe and below Fed Funds and UK Sonia. This situation is typical Japanese methodology. Viewed from exchange rates, JPY/USD traditionally trades above JPY/EUR. USD/JPY from 116.00 to 117.00 trades JPY/USD at 0.008620 and 0.008547. EUR/JPY at 122.00 and 123.00 equates to JPY/EUR at 0.008196 and 0.008130. Takes 66 pips in JPY/EUR to move EUR/JPY 100 pips. Takes 73 pips in JPY/USD to move USD/JPY 100 pips. The better mover is EUR/JPY.

Call Rates in terms of Japanese yields trades above the 5 year yield at 0.92. The 5 year is the only closest companion to Call Rates along the yield curve. The 3 month, 2 and 3 year trade currently at 0.60, 0.82 and 0.89. The borrow low, lend high scenario operates smoothly in Japanese markets. Eonia as a comparison, borrow at Eonia  must lend at least to the 3 month maturity because the 1 week to 2 month trade below. Europe markets lack proper functionality.

A drop in the Call Rate must remain above Europe and below Fed Funds to maintain the Japanese tradition. Only problem in the  Call Rate are longer term maturities are far to high. Consider the curve average is 0.0628, OIS at 0.03 and longer maturities are running at 1.12’s. The Call rate at 0.96 has room to travel lower in relation to current Eonia at 0.64.

USD/JPY has two vital points, below at 114.20 and above at 117.43. Both drive USD/JPY for the remainder of the week but slight changes will be seen as prices move higher and lower.

 

Brian Twomey, Inside the Currency Market, btwomey.com

 

 

EUR/USD: Present and Future Bottoms

Bottoms for EUR/USD upon Fed Funds announcement were located at 1.0597, 1.0534, 1.0495, 1.0485 and the base at 1.0429. EUR/USD stopped at 1.0498. Top was located at 1.0750 and 1.0820.
Today’s bottoms are located at 1.0473, 1.0447, 1.0386, 1.0346, 1.0337, and new base at 1.0250. Price stopped at 1.0366.
Current Bottoms. 1.0363, 1.0337, 1.0274, 1.0236, 1.0226 and base at 1.0156. EUR/USD current price is ongoing but bottom stopped at 1.0406.
Future bottoms. 1.0070, 1.0038, 0.9910, 0.9859, 0.8612, 0.7814, 0.7346.
AUD/USD. Fed Day bottoms: 0.7422, 0.7407, 0.7378 and 0.7322. Price dead stopped at 0.7395. Future bottoms. 0.7167, 0.6929, 0.6779, 0.6636, 0.6453, and 0.6260.
What is not known is overbought V oversold because Central banks don’t understand such aspects to their exchange rates. They understand low or high and levels. They have ability to drive prices to certain levels. Bottoms are known because central banks view their exchange rates in thousands of points. Conversely, tops are known as well.
Because bottoms and tops are known doesn’t mean the Exchange rate reaches those destinations. Yet central banks must view exchange rates in thousands of points to not only know current and future exchange rate locations but investors, major companies and exporters doing business across borders must factor exchange rates years in the future for profit purposes. The full trade information is known, the trader based on their own evaluations enters the trades.
When GBP/USD dropped 3000 points or EUR/CHF 3500, why didn’t the BOE or SNB intervene. When the ECB began negative interest rates in Sept 2014, EUR/USD dropped so far 3000 points. Any word from the central banks, nada.
Written for Goncalo Moreira at fxstreet because his interesting views on exchange rates.

Brian Twomey, Inside the Currency Market, btwomey.com

Money Supply and FED: MV = PQ

 
From July to October 2016, the Fed reported no change to bond holdings. In billions, current Treasury securities owned by the Fed total 2,464. A +1 billion was added in July. Fed Total Assets in billions equates to 4,454 and Liabilities 4,414. Money in Circulation in Billions total 1,431. Currency in circulation is far less than Liabilities.
Maenwhile, the Velocity of money deteriorates. Consider M1 for Q3 2015 at 5.96 to current 5.67. Velocity asks the question how many times is $1 sepnt to buy goods and services based on time. A decreasing Velocity inform less transactions. M2 for the same period Q3 2015 to current quarter reveals Velocity dropped from 1.50 to 1.43. Raise the money supply and Fed Balance sheets based on Keynes and Fed Philosophy then it creates Inflation. Consider Wages minus Inflation then less transactions and purchase fewer goods is explained.
Money in Circulation divide by US population offers a per Capita basis at $4,700, now times by a family of 4 = $19,000.

Keynes feared Money supplies by populations because he feared “the people” would hoard money in certain periods and this would dismantle an economy therefore the wizards of the central banks had to control money supplies, “the people and economies. What is out of control in the Kynesian model is the Quantity Theory of Money where M X V = PQ. Or better stated M X V = Price, Expenditures, Quantity. Quantity is GDP.
Supply siders and 1000 years of history believed hold Quantity and Velocity as constants then the only aspect of the equation with significance is Price to Money Supply. Add or subtract to money on a weekly or daily basis regulates the price. If an economy’;s money runs to hot, raise the interest rate to control the price in relation to the money. The Federal Reserve was created and practiced 100 years of add and subtract money. It was the only function of the Fed to ” never again experience Boom or Bust cycles”. Then the wrecking ball of Keynes and the next worst entity ever to rule was the Democrat Party to change supply side theories.
An oversupply of M deteriorates P. If P deteriorates then wealth fails to generate and instead creates more poor.
Divide GDP by M1 equates to 5.33 and further equates to Expenditures to equal PQ as Total expenditures. M X V as total income = $19,062. Expenditures to Income runs 3.68. The object overall is to at least double M so to double P and allow both to run in tandem. Factor the central Bank 2% Inflation under Keynes misguided MV and PQ then economies fall again to further deterioration.
For growth in GDP then M and Q should rise and Velocities hold steady. P of Prices then follows while in theory Inflation is never a consideration to M and P in sync. The M and P assumption is we know the exact levels of P and M. If Inflation is measured as P then from 2008 to current, Prices rose from 210 to current 242. If M and P were in sync and the Fed employed old ways to add or subtract money then CPI would be far lower and an economic benefit to wealth creation.. Now ask what are benefits to higher rates of interest in the overall equations.
Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD: Levels, Ranges, Targets

Fed Funds from monthly averages 1 to 10 years are overbought to the extremes while averages 10 to 20 remain in middle range.. Dot Plots are 5 year averages and revealed last year Fed Funds would trade today at 1.00% and much higher. Fed Funds trades today at its typical 0.41 and closed at 0.41 everyday since June 24th. From December to June, Fed Funds closed
from 0.37 to 0.38.
Fed Funds fails to signal a hike, short term yields fails to signal a hike and Commercial Paper rates barely signal a rise. A raise places 1 to 10 year averages into further extremes while 10 to 20 year averages begin the journey to overbought. I’m not convinced the Fed Raises nor convinced a reason exist to raise.
From yesterday afternoon’s post, EUR/USD long target was 1.0661 with a sell reverse to 1.0643. Target actual was 1.0664 and reversed to 1.0646 on the same candle. Next candle, 1.0643 and 1.0629 broke to bottom at 1.0612 and between the range from 1.0629 to 1.0601.
Previous 1.0702, 1.0716, 1.0762 and 1.0785 are today’s 1.0724, 1.0784 and skyrocket to 1.0921 and 1.0967. The way higher for EUR/USD is clear and wide open.
Higher for EUR/USD to target 1.0688 and 1.0695 must break a tough area from 1.0651 to 1.0658. Then next 1.0682, 1.0695 and 1.0709. Reverse target is 1.0670’s.
Below, EUR/USD must break tough resistance at 1.0650’s to target 1.0636, 1.0625 then 1.0608. The bottom side is contained at 1.0592 and good long point.
EUR/USD base price is built upon 1.0453 with supports above at 1.0489 and 1.0592. Overall , EUR/USD price is low and oversold with ability to fly higher. EUR/USD Futures contracts are running currently 447, 000 and higher than Draghi’s 390,000 yet just shy of Nov 9 at 467,000. Open interest is extraordinarily high. Expect much volatility today against a buy drop strategy.

 

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD: Levels, Ranges, Targets

Today’s EUR/USD long target and sell point posted at 7:00 am was 1.0671. EUR/USD achieved 1.0667 in the 11:00 am hour and target was off by 4 pips. Once 1.0649 broke in the 10:00 hour then EUR/USD target was inevitable.
On the reported reverse from 1.0671, target at 1.0653 achieved in seconds. EUR/USD then struggled for 30 minutes in the lower 1.0650’s before it broke lower. Most important points were 1.0617, 1.0629, 1.0649 and 1.0660.
Pre June before the structural price changes imposed on markets by central banks, from entry to long target and reverse to support, the trade would’ve been done in 1 to even 2 hours at most. EUR/USD or any currency pair price would’ve flew to target and reversed then rested. The trade was then done. Perform this operation for 3 or 5 currency pairs, 2 hours at most and the job was done. Today was a long but the reverse holds for short targets then reverse long for extra pips. What are the changes and what did central banks do to their prices?
In the 9:00 am hour, EUR/USD bolted to 1.0640 then dead stopped. 1.0640 was the interval point between 1.0629 to 1.0649. EUR/USD then traveled back to 1.0629 support and dead stopped higher at 1.0653 in the 10 am hour. 1.0653 was the point between 1.0649 to 1.0660. EUR/USD t traveled back to 1.0649 support then hit 1.0667 target in the 11:00 hour.
The new structure imposed on markets is pure treachery in price moves and much longer for targets to hit destinations on most days. And this new structure applies to all currency pairs. Instead of wait for target, mulliple longs and shorts could’ve been taken to work up to the 1.0671 target. A long from 1.0617 would’ve paid 50 pips then short to 1.0653 for another 14 for a total of 64 pips. Yet multiple pips traded without profit.
Lets try this again.
EUR/USD long target and sell point is located at 1.0661, 10 pips lower than this morning’s 1.0671. Most important break points are located at 1.0629, 1.0630 and 1.0636. Above 1.0636 then range to target becomes 1.0636 to 1.0661.
1.0661 target achieves then short to 1.0643.
Above 1.0661, then next comes 1.0702, 1.0716, 1.0762 and 1.0785. What happened was 1.0793 disappears in favor of 1.0785 as top point. Previous 1.0785 devolves to 1.0762. Then 1.0723 and 1.0721 disappears in favor of 1.0716 and 1.0702.
Below bottom targets are located at 1.0601 and 1.0570. Further below 1.0503. A long at 1.0601 targets 1.0612. A long at 1.0570 targets 1.0597. Any price below 1.0570 is a market gift long to cross 1.0570 to target 1.0597.

 

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD: Levels, Ranges, Targets

Today’s EUR/USD top target and sell point is located at 1.0671. Why 1.0671 is because a wide area exists in between 1.0671 to 1.0721, 1.0723 then 1.0785 and 1.0793. Higher for EUR/USD means breaks at 1.0617 and 1.0629 then 1.0649. A break of 1.0649 then 1.0660 and 1.0671. The significance of 1.0793 is its the 3 month forward line and will rise and fall all week as EUR/USD rises and falls. 3 month forward liners are offered by the ECB as gratis in all EUR/USD pairs and its the only central bank among the major pairs to offer such a feature.
Most important today in this series is 1.0617 and 1.0649. A price achieved at 1.0671 then sell target 1.0653. Failure to break 1.0649 then sell target is 1.0642 and 1.0643.
On the bottom side is today’s bottom and long point at 1.0586. A violation of 1.0586 can only see EUR/USD at 1.0569. The bottom side overall is fairly contained at 1.0586 and 1.0513 because 1.0480 and 1.0469 comes next. The ECB at least for today is not ready to allow EUR/USD in the 1.0400’s.
A long at 1.0586 targets 1.0612 and note 1.0612 is located just below 1.0617. Any price below 1.0586 must come back to cross 1.0586 and still target 1.0612. A long below 1.0586 is a market gift.
Overall the EUR/USD price at current levels is low and dead on the floor. Flat on the floor is a mathematacal connotation to mean EUR/USD has miles of upside but its price like all central bank exchange rate prices are strictly contained and made worse by the new structures in place since June 2016. Currency prices are designed to trade around events and news announcements and when no news exists then a price trades at its average and an untouchable place for a trade.
The entire interest rate curve is valued at 26 basis points and not bad for EUR/USD but only a Brexit event would see such prices trade. Today, its gifts from the Gods to see 13 basis points trade.

 

Brian Twomey, Inside the Currency Market, btwomey.com

GBP/AUD V AUD/GBP: Levels, Ranges, Targets

From 1825 to 1966 and 141 years, Australia’s currency was known as AUD/GBP and its financial system was fixed to AUD/GBP because of the long standing relationship Australia shared with London’s money markets. The AUD/GBP Fix ended in 1966/ 1967 upon passage of Australia’s 1965 Currency Act. The Act mandated 2 AUD dollars were exchanged for  1 GBP.
From March 1919 to August 2014, AUD/GBP ranged from its lowest low at 0.3333 to highest high at 0.7824 for 4491 Pips and a mid point at 0.5578. Consequently, GBP/AUD ranged from lowest low to highest high from 1.2781 to 3.0003 for 17,222 pips and mid point at 2.1392.
Most vital break point for AUD/GBP to travel higher is 0.5958. Current price is 0.5926. Most vital break point for GBP/AUD below is 1.6784. AUD/GBP at 0.5958 translates to GBP/AUD at 1.6784. For GBP/AUD to travel higher from current close at 1.6874 then 1.6979 must break and it translates to AUD/GBP at 0.5889. AUD/GBP must travel lower by 37 pips while GBP/AUD to break higher must travel 105 pips.
GBP/AUD is running at about 2.81 times from AUD/GBP and fits into the 1965 Currency Act mandate. The break points from AUD/GBP at 0.5958 and GBP/AUD at 1.6784 again runs at 2.81 times. Actual 2.81 to GBP/AUD is 1.6741. Where a slight deviation to exact is due because close prices are employed. A close price is never correct and should never factor in trade decisions. The example is 37 V 105 pips because this distance runs at 2.84 times and is off kilter.
GBP/AUD points at 1.6979 and 1.6915 will dictate direction. Below points are located at 1.6777, 1.6753 and 1.6737. Below 1.6737 then floodgates open to 1.6683, 1.6659 and 1.6490. As in all GBP pairs, GBP/AUD price is extrmely low yet GBP/AUD as well is found a low low price in AUD/USD. Overall, we’re looking for GBP/AUD higher.
AUD/GBP must break 0.5925 and 0.5958 then 0.5964 and 0.5968. A break higher translates to a far lower GBP/AUD.

 

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD Futures: Volume and Open Interest

Volume and Open Interest since the inception of organized exchanges upon passage of the Commodity Exchange Act of 1922 was the premier trading indicator and its power as a market prediction is as much popular today as it was when markets began.  Commitment of Traders reports derived from Volume and Open Interest studies. Volume is defined as number of contracts bought or sold while Open Interest is the trade signal.

Rising Volume and Open Interest is bullish or trend. Low Volume maybe a correction but it depends if open interest rises. A rise is a correction and fall could be a reversal.  Average volume is a range trade. When Volume and Open Interest rises and price declines, good chance for a price downtrend.

For EUR/USD Futures on the soon to expire Dec 16 contract from Monday December 5th, Volume was 322, 164 contracts or in USD terms 1, 610,820,000. Open Interest was 436,620 contracts or USD 2,183,100,000. The daily change was minus 1,111 contracts or USD 5, 555, 000. Monday’s Volume was the second highest daily Volume since November 9 at 467, 285.

Tuesday Dec 6, EUR/USD Futures Volume was 231, 557 or USD 1,157,785, 000 and Open Interest 433, 237 or USD 2,166, 185, 000. The daily change was minus 3,383. or USD 16, 915, 000. From Monday to Tuesday, Volume dropped 90,607 contracts or USD 453, 035, 000 and Open Interest changed by minus 2,272 or USD 11,360,000.

Wednesday Dec 7, Volume was 152,424 or USD 762,120,000. Open Interest was 428,348 or USD 2,141,740,000. The change was minus 4,889 or USD 24,445,000. From Tuesday to Wednesday, Contracts dropped by 79,133 or USD 395,665,000. The change was minus 4,889 or USD 24, 445, 000.

Thursday Dec 8, Volume was 390,913 or USD 1, 954, 565, 000 and graduates to 2nd highest Volume since Nov 9. Open Interest was 428, 413 or USD 2,142,065, ,000. The change was + 65 contracts or USD 325,000. From Wednesday to Thursday , contract volume rose to +238, 489 or USD 1, 192, 445, 000. Open Interest was + 65.

Friday Dec 9, Volume was 275,036  or USD 35,720,000. Open Interest 424,945. or USD 2,124, 725, 000.  The overall daily change was minus 3,468 or USD 17, 340, 000. From Thursday to Friday, Volume dropped minus 115,877 or USD 579,385,000. Open Interest changed down 3,468 or USD 17,340,000.

Open Interest overall remains extraordinarily high. Contracts from Monday to Friday averages to 274,418. Open Interest averaged 430,312 and about 1.6 times of Volume.

 

Brian Twomey  Inside the Currency Market, btwomey.com