G10, Yellen, CPI: levels, Ranges, Targets

To address yesterday’s commentary further as we saw DXY drop yet again. Queen Yellen and monetary policy is directly responsible as interest rates and DXY are engineered, directed and manipulated rather than allow a free float. The political system and Trump lacks any responsibility as the current monetary policy dilemma lays directly on the doorstep of Queen Yellen.

As DXY drops, Gold priced in USD skyrocketed yet DXY failed to follow as is the norm. This situation speaks volumes to the Yellen program as DXY and Gold traditionally correlate in the high 80%. As well, severely oversold USD/JPY continues its drop.

The 4 trilion places Yellen inside a deep problem because interest rates should be far lower. The ECB and Draghi maintains the opposite effect to the Queen. The ECB’s overbought Money Supply should see a drop and higher interest rates yet European interest rates are maintained artificially low on purpose. The effect to Yellen and Draghi is the mispriced exchnage rate.
Luckily Queen Yellen is gone in February and cannot perform anymore lasting damage. Remember Bernanke. A recent statement in a panel discussion he stated he wanted to commit far more stimulus money. Yellen and Bernanke are dangerous because they are ideologically and unyieldingly committed.

CPI. Currencies are priced today to move. AUD/USD and NZD/USD however are awkward priced.

The progression of a currency price works as Money Supply, Interest Rates, Exchange Rates then economic announcement. The exchange rate is 3 times removed from its money supply foundation yet it is a derivative and derivative of the interest rate. Inside the Interest rate / exchange rate price by its ranges is the economic announcement, the 4th cousin in the progression. Levels, Ranges and Targets are known long in advance of the announcement therefore mo mysteries exist to a movement gone wild. Levels, Ranges and targets change everyday and no 2 days are the same. Are currencies priced to move today because the CPI release is seen as big movements by central banks or is wide ranges today the result of today’s numbers. The CPI release by itself is a small release and results in dead movements.

EUR/USD. Big line break point above 1.1809 then below drifts far lower to its break point at 1.1722. EUR/USD reaches 1.1722 by breaks at 1.1756, 1.1744, 1.1734, 1.1722.

GBP/USD. Same old GBP story. Break points are located at 1.2976 below and 1.2991 above. GBP then targets 1.2918 or 1.3050.

EUR/JPY. As usual, resistance is built into today’s prices at 128.72, 128.95 then 129.24. Below 128.14 and 127.96.

USD/JPY break points are located at 109.31 and 109.06. Above 109.31 then USD/JPY goes to upper decks as next break point is located at 110’s.

Brian Twomey