EUR/USD and GDP: Levels, Ranges, Targets

The vital point to note in GDP is 1.9 previous V 2.0 expected and a small gap. The gap is explained as 1.9 previous trades at the 3 year average from 1.96 to 1.90. GDP is currently bounded tightly near its averages but minus the 3 year then GDP trades below all its companion averages. Above 1.96 then the forecast target becomes 2.05, 2.08, 2.21 and 2.24. Shortest term, most significant break is 2.30.
If GDP breaks today 2.43, 2.52 and 2.69, USD will skyrocket higher. If the 2.30 area breaks then GDP has a good shot to shoot higher in future quarters. What’s holding GDP from significant higher latitudes is 2.47, 2.52 and 2.69 in the longer averages. All averages lack overbought or oversold status rather they wait for the impetus for direction.
The bottom side targets are 1.77 to 1.63 and way below at 1.0. Below 1.9 and 2.0 then look out below USD.
What drove GDP last quarter was higher Personal Consumption, higher private inventory investments, higher residential fixed investments and non residential fixed investments. It appears Americans were in preparation mode for the Democrats to perform usual economic destruction upon a possible election win. Exports were down as well as federal government spending.
Interesting aspect to today’s release is the possible Trump effect, if any. The main categories to view are inventories, investments, housing and the import and export relationship. A decrease in exports lowers GDP. Higher GDP later will be the result of more exports than imports but this will reveal an insight to the overall health of the economy for future quarters. Housing in previous economic cycles was always the leader to future growth. When Trump revealed Stockholm Syndrome after the ACA failure, hopes were lost Trump and for recovery.

When the ECB went negative interest rates, the Gesell model was once Inflation began to climb as previously stated then Prices, Inflation and GDP would all rise in tandem. This in turn would naturally raise interest rates. Eueozone GDP hit 1.7, Inflation at 1.8 and lower Employment. Now the market speculates to an ECB rate hike at a current 0.6. Silvio Gesell is a must read to understand the ECB economic plan. Overall, a lower exchange rate must comport to the overall economic scheme.

EUR/USD. The big break for shorts is 1.0752 then comes 1.0684 and 1.0616. All lines aren’t making much progress to take EUR/USD higher.
The big line break above remains 1.0904. Target today is right at 1.0810 to 1.0812 then we look for low 1.0700’s upon a 1.0752 break.

 

Brian Twomey

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AUD/USD and OIS Rates

The RBA’s gloomy December Policy Statement reported in the Minutes revealed Wage growth was down, Employment was down, Business Investment down, GDP expected down, Housing Construction down and down for overall Consumption. Meanwhile the economic outlook for Australia’s major trading partners was expected to improve but only led to a slight increase in exports and the majority was service related rather than the important commodity related complex long known in Australia.
AUD/USD dropped September 2016 to December from 0.7773 highs to 0.7169 lows yet AUD traveled back to March highs at 0.7746.
The RBA’s action plan was again, since the August 2016 OCR drop, to institute a non move able 1.5 interest rate for OIS maturities from 30 to 180 days from December and directly after release of December’s minutes to current day. AUD/USD then exploded higher in January to 0.7602, February 0.7741 and 0.7748 in March. The 1.5 interest rate instituted by the RBA offered an enormous opportunity for longs because it established a solid bottom and allowed the market to take AUD to upper reaches.
The 1.5 point was more than AUD higher. Australia contains a serious serious problem in their interest rate alignments and this conundrum is unique yet specific to Australia. Despite the RBA’s many calls to lower AUD and mentioned many times before, its impossible and now quantified for AUD to achieve the desired lower bounds.
As the current system exists, the RBA must either raise OIS rates or allow other vital interest rates to trade lower. This is a tough call and tall order in a well defined Australia money market system. The only other option as was done by Australia throughout its history is allow OIS to freely trade. The further problem to AUD is misaligned Correlations to economic announcements.
December’s statement was horrid yet 1 month later, AUD was 600 pips higher. Glenn Stevens mentioned many times how Commodity prices were misaligned to AUD. Commodity prices traveled lower yet AUD went higher. Economic conditions lower yet AUD goes higher. GDP down, AUD higher. November’s election saw AUD correct from 0.7700’s to 0.7300’s then back higher she went. Terms of Trade increased based on February’s statement, AUD roamed 200 pips while Commodity prices went higher and AUD/USD roamed. Yesterday AUD/USD broke vital 0.7597 yet it traveled higher. The interest rate system is aligned for AUD/USD higher, never lower.
Then the next problem is misaligned interest rates causes a serious off kilter Correlation from AUD currency pairs. The December statement mentioned AUD/JPY was higher. Misaligned and negative Correlations from AUD/USD to AUD/JPY is almost permanently built into the system as well for AUD/NZD, AUD/CAD and most vital to Australia trade in AUD/ASIA pairs. AUD/JPY is actually an old reliable negative correlation to AUD/USD while AUD/CAD and AUD/NZD revolve from positive to negative then back again. AUD/CAD and AUD/NZD require constant correlation monitor as both might travel together in any given day or week to AUD/USD or travel against.
AUD/CHF is the only reliable and steadfast Correlation to AUD/USD. View AUD/USD and the second pair in the line ups as JPY, CHF and CAD then one can see the opposites to AUD yet CAD, CHF and JPY belong to the same USD universe. As opposites, AUD/USD should easily correlate to high 90% degrees to AUD/CAD and AUD/JPY especially AUD/CAD because its a risk barometer currency pair. Instead, AUD/USD lacks a corelational pulse.
A fully functional system occurs when the main pairs and in this case AUD/USD has full Correlational control to its cross pairs. AUD/USD is at a complete disconnect to its exchange rates, its economic releases, and to the main 1.50 interest rate. Normally when the main pair lacks correlations to its cross pairs then the main pair drops significantly but not AUD/USD, it goes higher.
What explains the correlational disjunctions across currency pairs derives strictly from the RBA side and again the system of interest rates. The big movers in order are AUD/NZD, AUD/CAD and AUD/JPY. While cross pairs must price above the main pair, AUD/USD’s main cross pairs barely price higher than AUD/USD and AUD/CHF is the exact pair as AUD/USD. The system gets interesting when viewed from under priced AUD/EUR as its price always remains below.
The argument to AUD/USD from the RBA side of interest rates is exchange rate protections were built into the system to force price containment rather than allow a market price to develop. Viewed from reciprocals then price containment is clearly evident which translates to day to day volatility at a disadvantage. Without protections, AUD pairs would seriously move everyday. Yet certain protections are required. If AUD/EUR wasn’t protected, EUR/AUD volatility would explode on a daily basis to see hundreds of pips trade on any given day. What protections led to however was a lost currency pair in AUD/USD as the main exchange rate.
The impression from many prior statement reads is the RBA is confounded by AUD movements as if they don’t understand AUD triggers to movements. The RBA in all statements report on Trade Weight Indices and views AUD in percentage terms to its trade partners. If AUD moved 1 or 2% then it seems no big revelation and assumes all is well. I suggest the RBA study the ECB or its counterpart in the RBNZ.

 

Brian Twomey

 

EUR/USD and Cross Pairs: Levels, Ranges, Targets

Cross the Aisle Trump finally revealed himself as he not only suffers from severe Stockholm Syndrome but he’s a Progressive Teddy Roosevelt Republican aligned with Paul Ryan and the majority of Republicans in the House and Senate. Progressive is a kind modern day term for Communism and the Teddy Roosevelt Republicans represent Communism in a lighter form. Trump’s agenda will represent more of the same as we’ve seen from the last four presidents after Reagan’s departure. Trump and Ryan’s words after the ACA failure were truly weak and extremely vulnerable to Democrat enemies of America. Trump either aligns with the Freedom Caucus or little hope is held to his words or agenda.

EUR/USD. Headwinds at 1.0880’s and above now face EUR/USD at 1.0884, 1.0893, 1.0900, 1.0910 and 1.0929 . The always accurate and quick trade today was long Europe and sell America as EUR/USD now sits at the top of its daily range.
In days ahead, range point targets are located at 1.1003 and 1.1019 yet current EUR is overbought and informs the topside faces tough resistance.
The bottom side to EUR/USD overall is fortified by massive resistance at the rising line at 1.0732. For today, we’re looking to 1.0829, 1.0819, 1.0812 and 1.0801.
Further, EUR/JPY to head higher must cross 120.12, 120.78 and 112.45.
EUR/CHF remains truly a problem currency pair. The vital long and short points are located at 1.0727 and 1.0707.
EUR/CAD is far overbought and ranges inside major break points at 1.4275 and 1.4326 V above at 1.4599.
EUR/NZD is not only overbought from its short term averages but far overbought from vital break points below at 1.5165 and 1.4957.
EUR/AUD. Truly a terrific currency pair and great mover. Currently overbought from short term averages yet current price sits on vital support points at 1.4120, 1.4125 and 1.4190. We view EUR/AUD from the AUD/EUR perspective as those supports are located at 1.4127, 1.4116 and 1.4110.
EUR/GBP also remains a problem currency pair as the internal numbers are plain scary. Vital supports are located at 0.8631 and 0.8562.

 

Brian Twomey

Fed Funds and New Market Structures

In June 2016, all markets especially currency markets re structured by central banks. Took 2 years of research and began by the ECB to understand and fully view the effects in interest rates to market prices. But market prices includes every traded financial instrument on the planet from currencies, to yields, to commodities, to WTI, to stock indices etc. The Federal Reserve for example changed Fed Funds from a Volume weight mean to volume weight median. Now the BOE is in the midst to change Sonia to a volume weight median. The RBA is contemplating volume weight medians. The change as the BOE explains it results in about a full point shaved off the traded interest rate market price. This development should be alarming to market people because all market prices and in all markets, ranges were severely compressed.
All market prices and in all financial instruments begin and end in the center of the price curve. Pre June, market prices roamed and settled at higher, lower or middle bounds in the price path. A free money day trade in a short or long was seen when a market price settled at the highest or lowest bounds. No longer is this easy trade available. Post June, the speed, the trend, the overall price movements and the upward or downward progress to a price was severely slowed.
What changed was the center of gravity. A slower price path means a longer length of time in a trade yet for day traders to understand the deep esoterics to my words, then the day trade was completely reorganized. Range breaks are big events in the life of a market price yet central banks prevent range breaks so to allow the price to roam in smaller ranges for longer periods of time. The positive side to this story is extraordinary opportunities exists to successfully trade markets but the sophistication was altered therefore the “how to” trade strategies must change.
Fed Funds at 0.91 means a dead center price with an average for Monday at 0.91198. The outer extremes are located at 1.01052 and 1.01482. Prices change everyday. Thursday’s outer extremes were 1.03 to 0.89. The inner extremes are located from 0.89133 to 0.89571. Next are range breaks at 0.90524, 0.91479 and 0.92452.
Fed Funds on Monday will trade from 0.90524 to 0.91479. From the 91 center, Fed Funds will fan out and trade towards ranges but ranges won’t break therefore Fed Funds will trade back and close at the center. This daily operation describes every financial instrument on the planet under new structures.
The bottom side to Fed Funds will trade at 0.90545 and just above the range break point at 0.90524. The higher side will trade to the average at 0.91198 with stiff resistance at 0.91455 and 0.91500. Targets are located at outer extremes at 0.91541 and 0.91500. Most likely targets will be seen at 0.91305 and 0.91096 and just below the range point at 0.91479.
Fed Funds is a market instrument and as a traded instrument, it contains trade able levels, averages, support and resistance lines. Fed Funds Monday for example will trade inside 0.90524 to 0.91479 ranges from 0.91468 to 0.90545 and 0.90572. The overall range is a paltry 0.00955 and assumes the full range will trade.
In days of old, pre June ranges were 1, 2, 3 and 4% and resulted in hundreds of points per day traded rather than today’s 50 and 100 point days. The S&P’s best day last week resembled the Norwegian stock market at 17 points, WTI traded 2.48 points, EUR/USD 98 pips and 86 in the prior week. For currencies, control the major pairs then power is held against cross pair movement since far more cross pairs exist to every major pair.
The bottom side at 0.90524 means USD/JPY will trade to 111.03. The S&P’s will trade to 2336.42, WTI will trade to 47.90, 2 year yield will trade to 1.257, the 5 year yield will trade to 1.947.
Ranges from 0.90524 to 0.91479 means USD/JPY trades from 111.03 to 111.58. The S &P’s trades to 2348.12, WTI trades to 48.22, the 2 year yield to 1.264 and 5 year yield trades to 1.956.
If Fed funds trades to the average 0.91198 then USD/JPY will trade at 111.19, S&P’s will trade 2344.67, WTI to 48.14, 2 year yield to 1.26231 and 5 year to 1.95302.
Assume upper range at 0.92452 breaks then USD/JPY trades to 112.15, S&P’s to 2360.05, WTI to 48.46, 2 year yield to 1.2705 and 5 year to 1.9668.
DXY from range points 0.90524 to 0.91479 will trade 99.23 to 99.83 and to 100.34 if a break higher is seen in Fed Funds at 0.92452.
What changed in the new market structure is the starting and stopping price points because then it allowed for the ranges surrounding the price to fortify around the close. The currency price is challenged and its a far different animal than its counterpart instruments because its a smaller price yet it has ranges but needs ablity to move. Every other market instrument on the planet was made far easier to trade yet ranges were severely restricted which means the price must be viewed from smaller ranges.

 

Brian Twomey

 

AUD/USD and AUD/EUR Weeklies

 

AUD/USD. This week 90 pip range from 0.7670 to 0.7580. Actual 148 pip range last week from 0.7751 to 0.7603. Last 2 weeks post reported AUD/USD range 93 pips. Same this week at 90. Not overbought or oversold, just wandering.

Vital break points 0.7514, 0.7558, 0.7602, 0.7698 and 0.7795.

AUD/EUR. This week 83 pip range from 0.7101 to 0.7018. Translates to EUR/AUD 1.4082 to 1.4249. Actual last week 172 pip range from 0.7210 to 0.7038, means EUR/AUD 1.3869 to 1.4208. Last week post 86 pip range from 0.7220 to 0.7134. Two weeks ago 0.7210 to 0.7049.

EUR/AUD last week 345 pip  range 1.3860 to 1.4205 translates to AUD/EUR 0.7215 to 0.7039.

AUD/EUR vital breaks points 0.7086, 0.7087 and 0.7080. Translation 1.4112 and 1.4124. EUR/AUD vital break points 1.4190, 1.4115 and 1.4127, translates to 0.7047, 0.7084 and 0.7078.

Brian Twomey

 

G10 Weeklies

 

Why this aspect is offered is not only a weekly guide but multi day trades for interested. Any feed back to a login page on site here. I post normal times and all login anytime. Its up for consideration.

USD/JPY, GBP/USD and GBP/JPY will see best moves this week as range breaks are here. From multi week perspective, all broke ranges every week for last 3 weeks.

 

EUR/USD. This week’s range 274 pips from 1.0934 to 1.0660. Actual last week 98 pips from 1.0824 to 1.0726. Last week’s post to ranges 1.0870 to 1.0607 for 263 pip, result was 98 pips. 2 weeks ago 257 pip range 1.0799 to 1.0542. Weekly ranges held.

Vital break points 1.0728, 1.0669 and 1.0611. Above 1.0860 then 1.1036, 1.1041 and 1.1071.

EUR/JPY. This week’s 310 pip range 121.72 to 118.62. Actual last week range 249 pips from 121.82 to 119.33. Last week post range 303 pips from 122.50 to 119.47. Lower range broke by 14 pips. EUR/JPY at current bottom range.

Vital break points, 121.46 and 120.15. Above 121.46 then 121.73 to 122.57 range. Below 120.15 then 117.00’s next.

NZD/USD. This Week 110 pip range from 0.7083 to 0.6973. Actual last week 90 pips from 0.7086 to 0.6996.

Vital break points 0.7075, 0.7096 and 0.7209. Below 6829 and 0.6798.

GBP/USD. This week 22 pip range 1.2484 to 1.2462.This is danger to serious breakout. Last week post warned breakout as 96 pip range was 1.2444 to 1.2348. Actual last week 197 pips from 1.2531 to 1.23364.

Vital break points 1.2429 and 1.2397. Above 1.2530’s and 1.2570’s. Then 1.2670’s.

GBP/JPY. This week 27 pip range from 138.96 to 138.69. Danger here to serious breakout. Last week 263 actual range 140.39 to 137.76. Last week post 117 pip range from 140.25 to 139.08.

Vital break points 139.21, 140.55 and 141.90. Below 138.20’s, 137.70’s and 136.60’s.

USD/JPY. This week 43 pip range from  111.54 to 111.11. Actual last week range 112.88 to 110.62. Last week post range 113.04 to 112.23 for 81 pips.

Vital break points 112.05, 113.26, 114.47. Below 110.72, 109.56 and 109.02.

 

AUD next post.

 

Brian Twomey

EUR/USD and Yield Spreads: Levels, Ranges, Targets

The Democrat Party controlled media says ACA failure means Trump’s presidency is finished. The public believes it. Stimulus was mantra for central banks to control bond markets and the public believed it. ACA legislation moves the markets and the public believes it. And Joe Stalin’s Re -Education camps were about books. Have we lost our sense to analytical skills or does the news media contain overwhelming power to control the mind. Trump’s election was about the last and best hope to recover from a severe economic deterioration caused as usual by the 187 year old Democrat Party. Why Trump is because historically markets and economics outperform under Republicans.
Will Trump get the job done under intense opposition from not only Democrats and the news media but from the current majority of the Teddy Roosevelt wing of the Republican Party is unknown. Calvin Coolidge in the 1920’s was successful and its the Trump model in the modern day. Trump is smart and ahead of the curve and its suspected ACA failure is Trump’s attempt to oust Paul Ryan as Speaker and install a Freedom Caucus member to move Trump’s agenda forward.
What governs the Commodity markets in WTI, S&P’s and a vast majority of major commodities is the 10 and 2 year spread. Until both travels higher, look out below commodities. Current spread is on the edge.
The lowest spread for 2017 was 1.19 while the highest currently runs 1.22. If the spread was viewed as Real Yields then from 0.6 monthly Inflation, spreads run from highest to lowest at 0.59 to 0.62. Question is what is 1.22. Viewed from all 2016 and daily yields, the lowest spread was 0.81 to highest at 1.31. For 2015, 12 basis point spreads ran from 1.29 lows to 1.41 highs. From 2015 to current, topside spreads dropped 10 basis points. Real GDP in the interim period based on annual averages ranged from recent 1.6 to 2015 highs at 2.8. GDP is running above the spreads yet DXY from current spreads sees its best level at 100.25 against the next range break at 101.08 and 101.58.
EUR/USD current range is located from 1.0904 to 1.0630. The toughest road for EUR/USD is the downside as breaks must see 1.0722, 1.0665, 1.0630 and 1.0605. Then comes the solid base at 1.0530’s. Yet above for EUR/USD at 1.0904 is the 253 day average at 1.0862 and a daily dropping line. A break higher then next comes 1.1005, 1.1043, and further 1.1143. The bottom side then rises to must break for shorts at 1.0730 and 1.0670. EUR/USD shorts must see a break at 1.0722 or it faces a slow slow grind higher.

 

Brian Twomey

S&P’s: Levels, Ranges, Targets

Today’s S&P trade highlighted below and posted at the close on the previous day to run until the next day’s close, saw my 2336.70 bottom hold. The challenges to 2336.70 within the 24 Hour Trade were located at 2341.22, 2339.75 and 2338.50. The S&P’s bounced higher each time price traded near bottom.
The high for today was 2356.02 at the higher end of the price curve and traded between intervals from 2355.16 to 2357.44. The 2366.23 target was ambitious as not only was 2357.44 at the highest end but 2360.74 was a vital range break. Overall 17.52 range for today was located from 2338.50 to 2356.02 and th best day for the S&P’s all weel.
S&P Trade March 22nd to 23rd.
Bottom. 2336.70
Target: 2366.23 with caution at range point at 2360.74.
Levels to target: 2348.48, 2348.95, 2348.97, 2350.93, 2351.18, 2355.16, 2357.44, Target 2366.23.
Range breaks above: 2360.74 and 2397.63, Below 2336.21, 2300.27 and 2299.26

The new S&P trade to run from today’s 2345.96 close, March 23, to close March 24.
Bottom.2334.23
Upper target 2363.72.
The levels to target: 2346.25, 2346.46, 2348.44, 2349.35, 2351.83, 2352.76, 2357.46.
The target price again is ambitious as the end of the price curve ends at 2357.46 but upper range points rose today from Wednesday’s 2360.74 to 2383.39.
Upper range breaks begin at 2383.39 then 2395.09. Below holds strong supports at 2309.11, and 2297.83.
The vital aspect to a range S&P market is the Fed Funds raise by Yellen. Fed Funds Effective skyrocketed from 0.66 to close since the announcement at 0.91. Yellen not only hurt DXY’s further rise but bond yields dropped and continued its drop days after the formal announcement. The press conference and any spoken word by Yellen was unnecessary as the raise alone was the impetus to drop DXY, yields and stock markets. Yields must rise to see a continued upper direction in the S&P’s.

 

Brian Twomey

S&P’s and WTI: levels, Ranges, Targets

 

 
S&P trade today, posted yesterday below. Yesterday close at 2344.02, today closed 2348.45. Bottom at 2332.29 was actual 2332.52. Target at 2363.13 saw high today at 2348.60. Today’s high fell between 2347.41 to 2349.88. No range breaks today.

S&P trade March 21 to 22 below.
S&P Close: 2344.02.
Bottom. 2332.29.
Targets. 2363.13 to 2363.34.
To target. 2344.14, 2344.52, 2344.84, 2347.41, 2349.88, 2352.99 Target 2363.13.
Range points: 2368.82 and 2407.43. Below 2295.93, 2282.65 and 2221.29.

S&P Trade March 22nd to 23rd. Good for 24 hours, tomorrow’s close.
Bottom. 2336.70
Target: 2366.23 with caution at range point at 2360.74.
Levels to target: 2348.48, 2348.95, 2348.97, 2350.93, 2351.18, 2355.16, 2357.44, Target 2366.23.
Range breaks above: 2360.74 and 2397.63, Below 2336.21, 2300.27 and 2299.26

WTI
Today’s trade, posted yesterday. Bottom 47.26, saw lows at 47.02 and immediate bounce to 47.60. Target 47.89 saw high price for today at 48.29. Lows at 47.02 hit range point at 47.00 while above 48.00 saw price above.
WTI March 21 to March 22
Close 47.50.
Bottom. 47.26.
Target. 47.88 and 47.89.
To Target: 47.51, 47.56, 47.61, 47.68, Target 47.88.
Range points: Below 47.00 , 46.52 and 46.25. Above 48.00, 48.49 and 48.77.

WTI Trade March 22 to 23. Godd til close 23rd.
Close 48.16.
Bottom. 47.91
Target: 48.52, Caution to range point 48.41.
To target: 48.21, 48.29, 48.34, 48.43 and 48.52.
Range break below 47.90, 47.15, Above 48.41 and 49.16.
Same principle as in currency trading, range points and breaks hold more vital import than a trade able level.

S&P’s and WTI: Levels, Ranges, Targets

Yesterday S&P Trade March 20 to 21 below. Target from 2360’s was 2390 but actual saw 2378.62 and closed between the intervals from 2375.52 to 2381.76. Trade derivation is 24 hours. Long bottoms, sell tops.

S &P’s. Close 2368.75.
Bottom. 2356.90.
Targets. 2390.94.
To Target: 2368.88, 2369.25, 2371.50, 2371.83, 2375.52, 2381.76, 2384.83, 2390.94.

S&P trade March 21 to 22 below.
S&P Close: 2344.02.
Bottom. 2332.29.
Targets. 2363.13 to 2363.34.
To target. 2344.14, 2344.52, 2344.84, 2347.41, 2349.88, 2352.99 Target 2363.13.
Range points: 2368.82 and 2407.43. Below 2295.93, 2282.65 and 2221.29.

WTI Oil
Yesterday WTI, March 20 to 21. Target at 49.43 actual was 49.47.
WTI Crude Oil
Close 48.98
Bottom. 48.73.
Target. 49.43
To Target : 49.03, 49.04, 49.12, 49.22, 49.24, 49.31 and Target 49.43

WTI March 21 to March 22
Close 47.50.
Bottom. 47.26.
Target. 47.88 and 47.89.
To Target: 47.51, 47.56, 47.61, 47.68, Target 47.88.
Range points: Below 47.00 , 46.52 and 46.25. Above 48.00, 48.49 and 48.77.

 

Brian Twomey, Inside the Currency Market, btwomey.com, Contact: brian@btwomey.com.

S &P’s and WTI

 

S &P’s. Close 2368.75.

Bottom. 2356.90.

Targets. 2390.94.

To Target: 2368.88,  2369.25,  2371.50,  2371.83,  2375.52,  2381.76,  2384.83,  2390.94.

WTI Crude Oil

Close 48.98

Bottom. 48.73.

Target. 49.43

To Target : 49.03, 49.04, 49.12, 49.22, 49.24, 49.31 and Target 49.43

 

Brian Twomey

USD/JPY and Correlations: Levels, Ranges, Targets

From Correlations, USD/JPY solidly owns EUR/JPY and GBP/JPY at + 98% and + 90%. Confirmation is established as EUR/USD runs minus 91 % to EUR/JPY and GBP/USD tracks minus 63% to GBP/JPY. USD/JPY ownership at high correlations could easily sustain for long periods in the future because it takes vital break points to reverse positive to negative and vice versa. The + 50% bound must break and that’s a long way from current prices especially when range points are far away. Currency pairs are currently trading average points inside wide ranges.
The major problem to USD/JPY is break points from 112.68 to 113.63. EUR/JPY in comparison, break points are located from 120.37 to 121.45 then comes GBP/JPY from 139.49 to 140.77. The ranges are 95 USD/JPY, 108 EUR/JPY and 126 GBP/JPY. All pairs trade within respective ranges and most restricted range is USD/JPY yet USD/JPY is the pair that must lead.
USD/JPY now trades an 85 pip range from 113.07 to 112.22. The protection to 112.22 is 112.37 then below 112.22 comes 112.10, 111.96, 85 and 111.73. Below 111.73 then lookout 110.70’s.
On the topside 112.86, 112.97 and 113.02 provide headwinds to a 113.07 break. Again, USD/JPY must lead the range break charge and EUR/JPY as well as GBP/JPY will follow. A march higher must come from the USD side of this story.

 

Brian Twomey

USD/JPY, Yields, Fed Funds: Levels, Ranges, Targets

Despite the Fed hike Wednesday, the raise wasn’t reflected in 0.66 Fed Funds until Friday’s close at 0.91. From 0.66 to 0.91 is significant in one day yet the failure for Fed Funds to trade at higher levels in two days from Wednesday to Friday explains, for the most part, why USD dropped.
Fed Funds should begin to settle in the 0.86 to 0.87 region if past is prologue to borrow against Antonio’s words from Shakespeare’s The Tempest. Further, the non movement in Fed Funds is demonstrated in dead money markets around the world as those markets particularly the G10 in EUR, CAD, JPY, GBP, AUD and NZD failed to trade at levels reflective of a Fed Funds rise. The caveat in interest rates is CAD and JPY are far different currency pairs and far outside the norm from respective counterparts because price triggers are non normal. Fed Fund problems leads to USD/JPY and its severe price consolidation.
This week’s 81 pip range and break points ahead are located from 113.04 to 112.23. Last week’s 303 pip range was 116.28 to 113.25 and actual movements were located at 266 pips from 115.13 to 112.47. At 81 pips, USD/JPY warns not only a significant move ahead but price trades at its lower ranges. Corresponding EUR, GBP, AUD and NZD trade at upper ranges. Most significant is GBP and could easily see the big move. USD/JPY is most especially out of step to EUR/JPY’s weekly 303 range.
Further to Fed Funds and seen in Treasury yields is Treasury 10 and 2 spreads traveled 2 basis points lower from Wednesday to Friday from 1.20 to 1.18. Treasury 10’s to 3 month before and after Yellen dropped a huge 10 basis points from 1.87 to 1.77. A 1.18 USD/JPY informs a higher price to 113.60’s and 120 from 1.77. USD 2 year V Japanese 2 year spreads runs 1.06 positive and negative 1.57 from Japanese to USD. At 1.06 before Fed funds dropped, USD/JPY informs a 115 price and 113.00 after the new Fed Funds rate.
The Fed funds rise not only forced USD/JPY lower but into a massive consolidation zone and seen from yield spreads as well as the 2 year yield alone. If yield ranges are ever restricted, it forces down a currency price because inside yield ranges is where Outright Forwards are traded as well as the respective Forward Points. The vast majority of Outright Forwards are traded yet sold at the 100 day average due to its wider ranges and it explains why a currency price has trouble crossing 100 day averages.
USD/JPY currently sits oversold on its vital break point line at 112.69 with break levels above at 113.62 and 114.56. Oversold USD/JPY means from 114.56, 5 to 20 day averages and 100 day. Below, USD/JPY faces 112.12, 111.85 then the floodgates open to 110.74 and the current base at 109.00’s. USD/JPY and GBP/USD is especially on the watch list for the week with far higher possibilities.

 

Brian Twomey

 

G10 Pairs

 

EUR/USD. Weekly range 1.0870 to 1.0607 for 263 pip range. Last week 257 pip range from 1.0799 to 1.0542, actual 1.0596 to 1.0776 = 180 pips.

Major break points 1.0686 and 1.0600, Above 1.0790’s.

EUR/JPY, Weekly range 122.50 to 119.47 for 303 pip range. Last week 295 pip range from 124.00 to 121.05, Actual was 208 pips from 122.86 to 10.78.

Major break points 121.43 and 120.35

USD/JPY. Weekly Range 113.04 to 112.23, for 81 pip range. This range warns big breakout. Last week 116.28 to 113.25 for 303 pip range. Actual 115.13 to 112.47 for 266 pips.

Major Break points, 114.56, 113.62 and 112.68

GBP/USD. Weekly Range 1.2444 to 1.2348, for 96 pip range. Last week 263 pips from 1.2296 to 1.2033, actual range 295 from 1.2100 to 1.2395.

Major break points,1.2399 and 1.2385

GBP/JPY. Weekly range 140.25 to 139.08 for 117 pip range. Last week 141.11 to 138.10 for 301 pips, Actual range 263 from 140.82 to 138.19.

Major Break points, 142.04, 141.27 and 139.50.

USD/JPY ready for big move, GBP/USD ready for big move, GBP/JPY will follow GBP/JPY. Could easily be USD higher week, means EUR/USD drops.

Brian Twomey

AUD

 

AUD/USD weekly range 0.7748 to 0.7655, 93 pips. Last week 0.7580 to 0.7487, 93 pips. Last week AUD saw lows at 0.7530 then broke 0.7580 and climbed to 0.7724.

Major break points 0.7498, 0.7577 and 0.7795, Current way overbought.

 

AUD/EUR. Weekly 86 pip  range from 0.7220 to 0.7134, as EUR/AUD 1.3850 to 1.4017. Last week 0.7210 to 0.7049 or 1.4185 to 1.3868. Overbought / oversold ? Neither

Major break points 0.7073, 0.7090 and 0.7092 = EUR/AUD 1.4138, 1.4104, 1.4100.Points to watch 0.7149 and 0.7151 or 1.3987 and 1.3984.

Brian Twomey

 

 

AUD/NZD: Levels, Ranges, Targets

AUD/NZD at 1.0400’s in February was an extraordinarily low price therefore a bolt higher was inevitable. Part of the reason why higher is AUD/NZD was located at bottom of a wide range from current 1.0400’s to 1.1500. Current price at 1.0900’s is now fairly mid range between both range points. What explains higher for this week was partly AUD/USD but especially a severely oversold NZD/USD from 0.6800’s. The oversold pressures in NZD/USD is now relieved as resistance lies from 0.7013 to 0.7069 and 0.7099. Likewise for AUD/USD as 0.7795 threatens AUD lower.
What drives AUD/NZD is exclusively NZD. If not for NZD, AUD/NZD would trade from 1.0833 to 1.0888 and threaten the bottom break points at 1.0700’s. The current break points are located in a 133 pip range from 1.1058 to 1.0925. The point 1.1058 is met however with thick and many resistance points from 1.1004, 1.1019, then 1.1031 to 1.1058. Further, an 1100 day average exist at 1.1042 as well as severe overbought at averages 100 day, 200 and 253.
While 1.0925 is the break point, AUD/NZD needs desperately a break at 1.0906 and 1.0903 to see 1.0888, 1.0859 and 1.0833. Then comes 1.0784 and 1.0691. Why 1.0903 is vital is because its a range break. What a 1.0903 break means in the larger picture is massive supports exist at 1.0767, 1.0713 and 1.0710. Should AUD/NZD break 1.0713 and 1.0710 then it travels far far lower.
As a strategy, I wouldn’t consider longs in AUD/NZD particularly when longs in either AUD/USD or NZD/USD is not favored. Longs for AUD/NZD, AUD/USD and NZD/USD would consider only upon far lower prices.

 

Brian Twomey

EUR/USD and FED Funds: Levels, Ranges, Targets

The early warning to Fed Funds “Priced IN” was seen January 10, January 17, 19 and 24. Fed Funds broke its trading range 4 times. Normally once or twice is seen in any given month as a factor of the numbers but 4 times began a warning. January 26 sealed the deal for “Priced In” as volume skyrocketed and maintained high volumes leading to the actual rise. Higher volumes lead to a permanent break of the range from January 30 to yesterday’s announcement.
When New Zealand raised OCR 3 times, then OCR was severely oversold and the RBNZ was forced to raise. OCR was oversold to the same degree as FED Funds was overbought before yesterday’s raise. Fed Funds entered dangerous overbought yesterday.
Upon Yellen’s words, Inflation will be higher at 2% but can GDP reach 2% and sustain itself. More work is essential on this issue as well as how far should GDP trade over or in relation to Fed Funds. Currently Fed Funds is providing the floor for Inflation and GDP. Then comes the question Inflation V GDP. The correlation from Fed Funds to Inflation is low enough to hardly register.
DXY saw lows yesterday at 100.32 and 15 pips from my reported bottom at 100.17. USD/JPY saw lows at 113.17 and 8 pips from reported 113.25. The DXY V USD/JPY variation maintained 7 pips.

EUR/USD shorts must break 1.0681, 1.0639 then comes 1.0597. A break of 1.0681 must contend with 1.0604 and 1.0602. EUR/USD saw highs today at 1.0740 which is the point between 1.0738 to 1.0761. What’s driving EUR higher is pure USD. Many hurdles higher exist for EUR however beginning at 1.0773, and 1.0806. Both must break for higher to 1.0860’s.
Traditional currency market prices after an interest rate rise or fall normally sees 5 days of volatility as the market re prices. USD must re price therefore the further tradition is to trade only USD due to its impending volatility ahead. How much volatility is seen and how many days will answer the question, how firm is the central bank control over prices. What was seen past on past interest rate rises and falls is 2 days volatility.

 

Brian Twomey, Inside the Currency Market, btwomey.com. Trade Signals offered for interested

USD/JPY V DXY: Levels, Ranges, Targets

USD/JPY began the week in ranges from 116.28 to 113.25, a 303 pip range. USD/JPY traded 114.49 to 115.21 or 72 pips. DXY traded in a dead range around 101.50. Both DXY and USD/JPY weekly are bound to Doji candles inside their dead ranges.
USD/JPY is driven exclusively by DXY. USD/JPY range breaks are located at 116.83 and 112.72, a wide 411 pip range.

DXY range breaks are located at 103.21 to 99.58, a 363 pip range. The range relationship is 411 V 363 and why the variation is due from USD/JPY is always priced above DXY and because USD/JPY must be priced to move. The daily variation is currently running about 7 pips.
Further ranges in USD/JPY V DXY from an entire assortment of range indicators reveals for this day both USD/JPY and DXY are almost dead center mid range. This means Yellen may force USD/JPY and DXY higher or lower but we will see prices won’t hold and will settle back to the center. Longer term and despite oversold USD/JPY, range indicators reveal problems ahead in upper prices especially in the 116.00’s.
For today, USD/JPY 281 pip ranges are located from 116.18 to 113.37. DXY 246 pip ranges are located from 102.63 to 100.17. Vital supports in USD/JPY are located at 114.54, 113.65 and 112.77. Lower lines at 112.77 and 113.65 are rising by the day. If DXY breaks its range at 103.21 then range becomes 103’s to 108’s. DXY break at 106’s then next rough points at 112 and 113.00’s. If USD/JPY breaks 116.00’s then its upper decks to 120’s easily.
Higher for USD/JPY at 116.00’s means breaks at 115.05, 115.16, 115.31 115.48 and 115.71. Higher for DXY to 102.63 means breaks at 101.64, 101.74, 101.86, 102.01, and 102.22.
Lower for USD/JPY means breaks at 114.54 and 113.65 then 113.25 to 113.45. Lower for DXY to 100.17 means breaks at 101.50, 101.11, 101.01, 100.90 and 80. Further down then 100.60, 100.54 and 100.22.
USD money markets screams for Yellen to raise Fed Funds. Current Fed Funds is severely overbought by 30 basis points based on price, ranges as well as long and short term averages. Does she raise to see GDP far lower.

On a raise, question is when is the next Fed Funds drop not how many more in the future. Dot plots are maximum 5 year median prices and they will show a low Fed Funds price at 0.20. To view Dot Plots is a colossal waste of time and an insult/ embarrassment to offer such a wasteful look for any that deeply calculated Fed Funds prices. Yellen words in my opinion are deeply hollow.
Brian Twomey

Commercial Paper, Yields, Tips: 5 Day Rule

 

Commercial Paper Non Financial:  March 6 to 10

1 m = 0.67 to 0.79 = 12 points. March 7 to 10 = 0.71 to 0.78 = 7 points.

2 M = 0.77 to 0.79 = 2 points.

3 m = 0.82 to 0.97, Mar 7 to 10? No close, inconclusive.

Commercial Paper Financial Offshore = March 7 to 10,

Minus 1 for 1, 2 and 3 month. No movement.

 

Libor

USD Libor 1 Month March 7 to 10 = 0.85 to 0.89 = 4 basis points.

USD Libor 2 Month March 7 to March 10 = 0.92 to 0.95 = 3 basis points.

USD Libor 3 Month March 7 to 10 = 1.10 to 1.12 = 2 Basis Points.

Commercial Paper V Libor = Offshore.

T Bills

T Bills 4 Week. March 7 to 10 = 0.53 to 0.58 = 5 points.

T Bills 3 Month. March 7 to 10 = 0.73 to 0.73 = 0

T Bills 6 Month. March 7 to 10 = 0.82 to 0.87 = 5 points.

T Bills 1 year. March 7 to 10 = 0.95 to 1.00 = 5 points.

Tips.

1 M March 7 to 10 = 0.55 to 0.60 = 5 points.

3 M March 7 to 10 = 0.76 to 0.75 = Minus 1.

6 M March 7 to 10 = 0.87 to 0.89 = 2 points.

1 Y March 7 to 10 = 1.02 to 1.03 = 1 Point.

2 year March 7 to 10 = 1.32 to 1.36 = 4 points.

 

The monitor to Yellen and 5 day Rule. Today’s closes informs positions.

 

Brian Twomey

 

 

 

 

 

EUR/USD and Market Periods

The 2008 crash was not only seen long in advance but its most important because it marked the final period of the 50 year financial cycle which began in January 1972. Periods in 50 years of financial markets are almost ordained from the heavens and marked in the Bible in many instances such as 7 rich years and 7 lean years. Jubilee years are 49 years and after 49 the system of money and exchange reverts to a different period inside a new system. Markets and central bankers can’t fight the system since its perfection as a prediction is perfect since establishment of the BOE as the first central bank in 1694. What we’ve seen from central bankers since 2008 is disaster policy after disaster policy against zero results.
From 2008 and enter of the Last Quadrant of 4 in a 50 year period, current Quadrant goes from 2008 to Maximum 12 1/2 years. This places the end period of this cycle at 2020. As markets draw near to 2020, more danger exists to the final crash. Markets begin and end in crashes then the system reverts to another period. Market Volatility as well is almost ordained based on the cycle period. Current volatility is the lowest in 50 years and again warns of danger because prices lack direction and policy purpose.
While the next crash is almost ordained by the number 50 and its miraculous prediction, Quadrant 1 in the new period always marks great prosperity and lasts as much as 12 1/2 years. But markets and prosperity become overbought so Quadrant 2 historically marks corrections for as much as 12 1/2 years. What “as much as 12 1/2 years ” means is the number 7 and 10 are vital to measure as a guide the last point at 12 1/2. The current period and year is in the severe danger zone. The positive aspect to the final period is prosperity lies ahead for the world and markets but the type of trade able market is unknown.

How markets arrive at crashes and periods is government debt is unable to sustain itself.

Respected Kit Jukes at SG highlights a BIS paper and confirms my correlation numbers. As Yields and interest rates drop, debt rises. As Debt rises further then the debt service cost also rise. Main point and quantified by the BIS since the 1980’s is GDP suffers as Debt rises. Yellen wants higher Fed Funds but is not willing to relieve the debt. Yellen deserves the overall award for Quadrant 4 status because the raise if seen is suspect.
Why the sudden interest in raise? CPI at 0.6 equals Fed Funds at 0.6.
EUR/USD. Currently trades around its vital break point at 1.0669. Shorts must break 1.0669. The problem in 1.0669 is 1.0596 lies below but fortunately for shorts at a stasis point. Sell points today are located at 1.0726, 1.0737. Much daylight exists above 1.0737 at 1.0753 and top of today’s channel at 1.0770.
Shorts must break 1.0696, 1.0674, 1.0669, then lower targets become 1.0630’s. Further to bottoms is from 1.0505 to 1.0573 will be roughest supports.
Brian Twomey