G10, Moments, Skew: Levels, Ranges, Targets

NZD and the RBNZ sets the trading standard for Asia because they are the first, because they are most aligned with USD interest rates and trading days, because NZD is and will remain the best signal to every currency pair. If NZD/USD breaks a Support / Resistance then the remainder follow. Next comes little brother AUD and truly a little brother. NZD is viewed not as a Commodity Currency, its a currency that sells commodities. NZD is a great pair to hit perfect targets, one of the absolute best. The RBNZ by far remains the smartest central bank on the planet in the design of economics, interest rates, currencies and overall market systems. The perfection ascribed to the RBNZ is astoundingly well deserved.

4 moments to the Standard Deviation to answer a few questions. The 3rd Moment is the Skew and to currency trading, its absolutely the worst calculation, the worst indicator. Academic papers and scholars wrote much about the Skew and the idea that the Skew remains constant. The Skew must remain a constant because the currency price is the 3rd instrument in the progression therefore the Skew can’t ever change. Its naturally built in as a constant. EUR/USD for example maintains a constant 0.2 Skew.

The Skew can’t drop because of its interest rate association. If the Skew wasn’t a constant, then the currency price wouldn’t maintain its deviation to other financial instruments. All the financial instruments associated to the currency price would trade on a 1 for 1 basis. That means markets don’t exist to trade.

I’m not sure what the Skew means for option traders, probably nothing as it doesn’t apply to currency prices. To technical traders that wish to test this concept then take a Z value to the Skew but don’t use a standard deviation because its to wide. Use the next best fit in the Standard Error. To understand the constant Skew further then look at Hazard Rates by Time minus Average divide by the Standard Deviation. What to see in the Skew is the range as the Hazard answers what is the Rate of failure, how fast / slow. It beats rate of change by miles.

USD news today is Imports and Exports. We’ll see the same old 50 year story, Imports beat Exports. Exports should be good against the low DXY yet Imports will beat Exports.

GBP/USD. Bottom for today is 1.2897 and currently GBP trades at its bottom. First above is 1.2905, then 1.2912, 1.2931. The big break is located at 1.2954. Should be good short point to targets again 1.2905 for today.

USD/JPY. Massive resistance at 110.95 and 110.92. At 110.48 is the break point to go higher. Watch 110.64. Below watch 110.23.

USD/CAD. Massive resistance at 1.2794 and 1.2797. Above CAD needs a break at 1.2752 for higher or 1.2723 for lower.

EUR/USD. Big break 1.1719 and above 1.1791.

NZD/USD break points 0.7310 and 0.7275

Brian Twomey