G10, Crash, Trump: Levels, Ranges, Targets

Eonia Today minus 0.358, Aug 1 = -0.356, Jan 2 = -0.356, January 2016 = Minus 0.241. This is the manner how Draghi manipulates the money supply to his desire. Draghi’s caution is the level of the exchange rate and his ability to control it as the risk is an out of sync EUR. In the old days of wider ranges and central bank interventions, exchange rates were brought to acceptable levels yet it came at a price. Under today’s strict exchange rate controls, even a verbal intervention fails to move exchange rates to desired levels.

Glenn Stevens and AUD is a perfect example. Stevens verbal interventions resulted in a higher AUD everytime. A poor economic announcement dropped AUD temporarily yet AUD went higher. The central banks created the system of interest rate and money supply out of kilter then they created a failed system to harmonize the exchange rates to the money supply and interest rates. The central banks cannot stop an intended what I call the Statistical price path of an exchange rate. Central bankers may speak to their heart’s desire but the exchange rate must achieve and must fullfill its intended target. If Draghi or Stevens level of the exchange rate is unwanted, prayers to the forex gods can’t assist.

We’re starting to hear the words crash from many fronts. Jimmy Rogers, Marc Faber and a few from the business channels. Reported here was crash territory is upon us and 2018 will be a rough year.

Danielle DiMartino Booth in Fed Up states Auto delinquency rates is the premiere indicator. Currency default rates hover at 2008 levels based on quarterly June figures and defaults are rising. September is the next release. Her message is the crash is here as interest rates rose and wages remain stagnant. Yet view charts and realize high default rates were already upon us. Much has already been written on this topic . For Interested hit Experian and the American Bankers Association for deep statistics and graphs.

On the Trump front and related to the crash context. The Democrats, protests, impeachment is all designed to break Trump psychologically, to impair his agenda, to force him to address the overwhelmingly problems caused by the protests. Democrats wish to overwhelm the system and overwhelm Trump to the breaking point. Trump wins by a sledge hammer to stop the Democrats or loses to chaos. My bet is sledge hammer. Gold must be part of the portfolio.

EUR/USD. Break points 1.1773 or 1.1688.

GBP/USD break points 1.2844 and 1.2852 or 1.2918 and 1.2925.

EUR/JPY. 127.56, 127.72 and 127.88 or 128.41 and 128.69.

USD/JPY 108.94 and 109.10 Vs 109.47.

Brian Twomey