USD Currency Pairs: Levels, Ranges, Targets

Following are ranges and range points for USD pairs. The pairs should hold its ranges yet won’t drift far from offered prices.

Wednesday is PMI day for EUR and USD while CAD lacks any data releases.

USD/JPY, 108.81 to 110.26. At 110.26 rose from 110.19 over the past few days. Its a must break point to travel higher over coming days.

USD/CAD 1.2504 to 1.2655. At 1.2655 is a bit high, more likely is lower 1.2600’s. Today for example USD/CAD high break point was 1.2608.

USD/CHF 0.9612 to 0.9728

USD/ZAR 13.15 to 13.26 and 13.33

USD/CZK 22.0756 to 22.2779 and far above at 22.4947

USD/SEK 8.0604 to 8.1292

USD/PLN 3.6134 to 3.6437, PLN is Poland and a great pair to trade. Poland is an economic leader currently and a smart, well run  central bank.

USD/SGD 1.3547 to 1.3659

USD/HUF  256.48 to 258.23 and 261.86.

Questions, comments or concerns, need a special pair, data point then feel free to write anytime, brian@bwomey.com.

Its a small trade service I run and if interested in signals feel free to write. Traders have been with me since day 1 which is about 15 months. Trades aren’t contained to currency pairs but any Commodities, Oil, stock markets, gold, silver is also available.

Many thank you’s to views and recent comments.

 

Brian Twomey

 

AUD/USD, AUD/EUR and EUR/AUD: Levels, Ranges, Targets

EUR/USD Vs AUD/USD’s relationship on a 1 year basis runs correlations at 97%, the past 50 days at 93% yet 25% over the past 20 days. EUR/USD correlations to AUD/EUR run solid negatives at minus 93%, Minus 81% and Minus 66%.

AUD/USD to AUD/EUR over 1 year runs + 48%, 50 day at Minus 54% and + 55% in the past 20 days. AUD/USD’s 50 day average is located at today’s 0.7843 and 0.6748 for AUD/EUR which translates to EUR/AUD at 1.4819.

AS AUD/USD will follow EUR/USD moves randomly, AUD/EUR trades far below EUR/USD and AUD/USD and explains the light Correlations. Either AUD/USD must drop considerably or AUD/EUR must rise far higher to realign the correlations.

 

AUD/USD determines because its ranges are priced above AUD/EUR. Yet AUD/USD on its own volition contains range problems as its price is stuck at extremes above in the high 0.7900;s and high 0.7700’s below. But those are extremes and only trades based on market flukes or out of alignment economic announcements.

Actual AUD/USD break points are located at 0.8045 and 0.8146 above and 0.7898, 0.7817 and 0.7791 below. Not much changed since the last serious AUD evaluation some time ago.To see a significant downtrend in AUD/USD then it must break 0.7778 then comes 0.7651. Overbought is seen in AUD/USD at the 20 day average, 100, 200, 253 and from 0.7778.

 

AUD/EUR trades around its current and most vital break points at 0.6735, 0.6781 and 0.6810 or EUR/AUD at 1.4847, 1.4747 and 1.4684. AUD/EUR is the most vital pair to the RBA and its severely contained otherwise EUR/AUD will see spectacular daily moves. Again explains the low Correlations and AUD/USD range problems. Yet EUR/AUD / AUD/EUR in our set ups is the premiere pair to trade Asia for overnight. AUD/EUR provides entries and EUR/AUD answers to targets.

What this all means for AUD/USD is more of the same ahead without expectation to a big move or vital break point anytime soon unless a far out of kilter economic announcement is released. The recommendation for AUD/USD and our own daily trades is to long and short at break point bottoms and tops. Yet AUD/USD direction is down so the sell raly approach remains.
The AUD/USD view today is targets above at 0.7976 on breaks of 0.7965 and 0.7967 and bottoms at 0.7906 on breaks at 0.7922. EUR/AUD break points are located at 1.4875, 1.4847 and 1.4753.

Brian Twomey, Trade Signals offered for interested

AUD/USD MA’s

 

79 Day Average = 0.7647

337 = 0.7550

592 = 0.7465

847 =0.7817

Current AUD 0.7930

1102 = 0.8146

1279 = 5 Y = 0.8456

1357 = 0.8554

1616 = 0.8856

1874 = 0.8950

2129 = 0.8916

2384 = 0.8795

2562 = 10Y = 0.8803

2640 = 0.8792

2895 = 0.8698

3153 = 0.8600

3411 = 0.8510

3590 = 14 Y = 0.8448

3665 = 0.8409

3921 = 0.8231

4175 = 0.8045

Current AUD 0.7930

4430 = 0.7898

4688 = 0.7817

4772 = Jan 1999 =  0.7791

 

Brian Twomey

 

Media, Trump and Presidential Approval/ Disapprove Ratings

 

The journalistic term 4th Estate of Government was attributed to British Parliamentary statesman Edmund Burke around 1841 as the King, Clergy and Commoners represented 3 estates but the Reporters gallery was “far more important to all”. Founding Father James Madison in Federalist Paper 51 envisioned the role of the press as a means to constrain government, to prevent anarchy, oppression and government tyranny. Ambition must counteract ambition and ambition’s control is to prevent abuses. This assumes the press correctly transmits government information. Further, if men were angels, no government would be necessary.

Fast forward to modern day public opinion polls to reveal the press/ government balance disintegrated as public trust of the press and government as well as approval/ disapproval ratings sit at first ever lows and dead bottoms. Yet nothing new to report as disapproval ratings began the drop in the late 1950’s.

Possible attribution to current disapproval lows is Eisenhower’s 1961 Farewell address as Military Industrial Complex power grab warning, Kennedy assassination, Democrats 1960’s Congressional super majorities, presidencies and civil rights, 1970’s Vietnam and Nixon, Reagan in the 1980’s then the phenomenon of Obummer and Trump.

From the public’s perspective and based on the University of California’s database polls, the public trusts government Sometimes at 80% and 20% Most Times from 1958 to 2012. Pew Research Center reports trust in government Almost Always and Most of the Time in 1958 achieved 75% and today at 20% yet never surpassed 30% since 2007.

Interest in Public Affairs ranged from 16% to 29% from 1960 to 2008 and remains in the middle 20% point today. Pew reports 74% of registered voters viewed the 2016 elections as important to who wins, up from 63% in 2012 and 2018 yet 67% in 2004. Roughly 85% followed election news closely or fairly close, up from 72% in 2012 and 81% in 2008.

A 20% interest in public affairs equates to 40 million persons while 74% of registered voters equates to 148 million as National voter registrations based on Politico reporting skyrocketed to 200 million in preparation for the 2016 election, up from 146 million in 2008 and 127 million under Clinton. New voters, 50 million accounted for 48% Democrats and 29% Republicans or 24 million Democrats Vs 14 million Republicans.

Pew in 2013 reported 28% said Journalists contribute “alot” to societal well being and down from 38% in 2008. Gallup reports currently 62% of the public says media favors Democrats and the largest divide since 1995 yet viewed from charts, the divide began its largest separation in 2003.

As a Trust in Media issue, Republicans trust media 14%, and 86% distrust while Democrats trust media 51% and 33% Independents. About 50% of Democrats say Media favors the Democrat Party. From 1998 to current day, 36% said News Media “gets the facts straight”, down from 54% in 1990 yet the highs were 55% in 1986.

Media bias is interesting as the 2001 terrorists attacks under Bush revealed 65% of respondents reported News Media were often inaccurate and the inaccurate rate remained at 58% to 55% from 2001 to current day.

From 1998 to 2001 under Clinton to 9/11 terrorists attacks and 2000 election, the inaccurate rate jumped to its highest from 45% to 65%. Under the first George H.W Bush Administration from 1988 to 1992, the inaccurate rate spiked again from 41% to 52%. Leading to the 1988 Bush election, the inaccurate rate bounced from 34% to 54%.

Not only does the inaccurate rate jump under Republicans but accurate / inaccurate rates are based on reported stories. Questions remain to government tactics, practices and policies in unreported stories. Government is thought in terms of Congress, Presidency and Courts but vast majority of government action and movements is performed inside the bureaucracy. Most important is does the news media contain a natural predilection to left wing politics on its own or is collusion with the Democrat Party the order of operations. Democrat Hillary Clinton was favored to win the 2016 election by most polls but the polls were biased as Pollsters over sampled Democrats to reveal partisanship.

While 80% to 90% of respondents in the Marist/ NPR/PBS poll disagree with the beliefs of White Supremacists, KKK, White Nationalists and Alt- Right, Black Lives Matter and Antifa are quite different stories. Black Lives Matter is the group who marched on American cities chanting Kill Police. Police died, many randomly.

Roughly 76% of Democrats agree to Black Lives Matter beliefs, 64% Republicans disagree and 54% Independents disagree. Black Lives Matter as a name on the surface sounds appealing, harmless and good cause yet a destructive organization. Words and word choices matter.

Antifa is an anti – Fascist, far left anarchist movement with origins in Europe and the United States in the 1920’s and 1930’s. Homeland Security reports Torch Antifa is the network and members oppose anti racism, anti sexism and anti semitism. Members wear black masks as a show of solidarity yet possibly to hide identities to avoid arrest. The destruction in April on the Berkeley campus is an example of the destructive forces of Antifa. Charlottesville is the second and Boston the third.
The news media states protests between White Supremacists and Antifa in Charlottesville and Boston are free speech rallies while in actuality two extreme ideological forces meet head to head against core principles of violence. Boston is the largest location by area and the crowds were much bigger than Charlottesville.

Roughly 53% of Republicans and 53% Democrats are unsure if they agree or disagree in the beliefs of Antifa. 46% of Independents are unsure. About 34% of Republicans mostly disagree while 19% of Democrats and 19% Independents mostly disagree. Antifa not only formed and jumped into action immediately but the public failed to understand or know Antifa’s principles, core beliefs, issues and overall foundation.

Madison’s two most powerful societal ambitions in news media v government equilibrium failed in its balance dating to the middle 1980’s data. One must ask exactly where and when the balance separated. Instead of the news media to report unbiased facts, accurate, timely and useful information, they chose sides and aligned to left wing politics and the Democrat Party by either design or osmosis. Design is apparent as replication remained over 32 years and reporting now enters deeply idealistic stages as in free speech rally Vs impending civil war.

Madison warned to unbalance as government oppression, abuse and tyranny is allowed to operate freely as no prevention exists to constrain or control actions. The masses suffer and become hostages as a forced conscription to government power. Polls appear meaningless and designed to strategize against Republicans from decrease in government domination.

Real Clear Politics reports Congressional Approval at current 15.3% and 73.3% Disapprove. Based on Gallup, From 1975 to 1997, Congressional Approval ranged from 30% to 40%, rose 40% to 60% from 1997 to 2000 then skyrocketed to 84% under Bush in 2001. Approval ratings then dropped to 17% by 2009 and hovered at 15% to 20% since.

At 73% Disapproval, old political thought was Congress lacks ability to function yet under the ability to operate freely assumption without journalistic reports, Congress is shielded from public view.

On National Wrong Track, 59.9% stated the nation is on the wrong track and 31.8% approve of current direction. The 75.8% highs in Wrong Track was seen in October 2011 and lows at 45.8% wrong track in June 2009. The range from February 2009 to current day was 45.8% to 75.8%.

Historically from 1981 to 2017, Satisfaction with national direction hit highs at 70% in 1981, 1991 and 2002. The lowest of lows was seen in 2008 at 7%. From the 2002 Satisfaction highs at 70%, dissatisfaction began a long downward slide to 7% in 2008 then a bounce to current 30%. Satisfaction/ Dissatisfaction appears to coincide to economic cycles as the 1981 recession was in last stages and Reagan’s tax cuts were in the Congressional passage development while 2003 to 2006 experienced an economic boom time. The 2008 lows at 7% was the result of the 2008 market crash.

Trump’s Approval rating is currently 39% and 55.1% Disapprove. January to current day, Approval ratings ranged from 46% highs to 34% lows. Based on the American Presidency Project, Presidential Approval Ratings normally begin high then drift although Franklin Roosevelt and Ronald Reagan were exceptions.

F Roosevelt began from 1941 to 1943 at 65% Approval and rose to 83%. Reagan began at 68%, dipped to 35% in 1983 then bounced to 71% by 1986 and left the presidency at 63%.

Truman began at 91% Approval then dropped to 22% and left the presidency at 27%. Eisenhower began at 77% dropped to 47% and left the presidency at 60%. Kennedy began at 72%, rose to 83% then dropped to 36%.

Johnson began at 77%, rose to 79% then began a long slide to 34% and presidential end at 36%. Nixon began at 59%, saw 66% highs then the slide to 22% lows and left the presidency at 24%. Ford began at 70% then slid to 36% and left the presidency at 53%. Carter began at 68% then the downward slide to 28% and left the presidency at 34%.

George H.W. Bush began at 51% rose to 89% then dropped to 29% and left the presidency at 52%. Clinton began at 56%, dropped to 36% then began an upward trajectory to to 69% and left the presidency at 63%.

George W Bush began at 57%, dropped to 50% then rose to 89% and the long down slide commenced to 25% lows and Bush left the presidency at 32%.

Obummer began at 67%, dropped to 38%, rose to 57% then dropped again to 39% lows and left the presidency at 57%.

 

All presidents Approval ratings averaged together factors from 46% to 34%. Trump currently hovers inside historic ranges 7 months into his presidency.

 

Brian Twomey

 

 

 

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

G10 and Trump Council

 

As Trump appeared set up by the few corporate names and Trumka from the SEIU gangsters, the belief is Trump saw this coming as he has maintained ability to remain one step ahead throughout his presidency. The early meetings with Trumpka and the corporate names had to determine loyalty questions. Trumpka was unquestioned as non loyal yet he was picked for the council. Was the set up actually a reverse as a means to reveal non loyalty to America by company resignations.
Disney for example is a command and control run company and was run this way since at least the 1980’s under Michael Eisner. As a corporate citizen, Disney fails miserably as they disappoint communities in any and all assistance. Money comes into Disney but never goes out.

The question is how many major American companies house corporate treasury departments outside the United States such as General Electric and others in Ireland. And when are they coming home to contribute to America. Is Disney located in Ireland and if so under high taxes and repatriations, chances are good Disney isn’t coming home therefore offered nothing to Trump’s council from the beginning.

View the loyalty question from F Roosevelt. Roosevelt lacked a chief of staff as the position wasn’t created until Truman and passage of the various Executive Office of the Presidency laws. Roosevelt was master at the palace intrigue as he never trusted himself so he tested loyalties from agency heads.

Are far right and far left groups protesting against each other. No, communism married fascism and Muslim Brotherhood to form one big power run by the Democrats. All funded by the Russians and Arabs. Protests will be much worse from here. Charlottesville was a warm up, a dry run. Recommended read to details on political thought is the Politics of Aristotle.

EUR/USD awaits 1.1673 as the next por of call. Longs must clear 1.1713, 1.1727, 1.1732 and big line at 1.1736. EUR boke bottom,
GBP/USD 1.2851 and 1.2859 determines 1.2843 and 1.2827 or above 1.2925.

 

NZD/USD. 0.7306 and 0.7333 above or 0.7301, 0.7292 and 0.7283.

EUR/JPY remains at its low end current at 1.2871, 128.87 then 1.2901.

USD/CAD 1.2601 or 1.2632.

 

Brian Twomey

Presidential Powers

 

Idealism is the belief in the way government supposed to function. This fantasy thought from idealists are the Trump haters as they see government size and power diminish by Trump’s actions. They are helpless to government as solutions to all problems and government as the sole organization to bring prosperity. Its a pure Marxian belief, pushed further by Lenin’s 1917 revolution, Wilson and hammered home by F. Roosevelt.

Yet for 100 years, idealism was treated as a political thought, a harmless competing political philosophy but read the Democrat Party e-mails and its found idealism devolved into government as a religion. Thought was turned into action by growing government for power, control and profits. Yet the slow moving thoughts were built upon Democrat majorities in Congress from Wilson to Nixon. Control the House of Representatives then control budgets.

The Realist are those that view the world for what it is in current context. The private sector and the genius of the people may derive and control their own economic destiny. See America from 1860 to 1912 to realize the idealists and government could never build America to that degree and prosperity.

The laugh is Presidential powers are found and limited in Article 2, Section 1 – 4. A President lacks powers and only controls the Military, Fed Government appointments, treaties and state of the union. Wilson was first to deliver the State of the Union message in Congress. Prior Presidents wrote a 2 page letter. Today, State of the Union is treated like the NFL superbowl yet its a waste of time to watch.

Executive orders is the newest presidential power yet they are harmless as the only purpose is to affect government as in for example addition./ elimination of an agency. Or Nixon’s addition of EPA.

Employ an executive order as a social justice tool as Obummer used widely and Kennedy did under Affirmative action then presidential power enters new territory. Employ executive orders as an economic tool as in Presidential commission on Manufacturing, commission on wages and any aspect concerning the private sector then new territory means control of economics and social justice in a 4 trillion economy.

Takeover Park Lands as in Slick Wille’s executive orders means even all land West of the Mississippi is owned by the Federal Government. Article 2 is then eliminated as meaningless and presidential power turns into President as King, Dear Leader, Kim Dung Un, Stalin. Yet all presidents since George H.W Bush are guilty. Not much is left for the Federal government to own as they control, Insurance, Healthcare, banks, student loans and their prize target is the Federal Reserve. America is heading towards empire rather than devolution of the Federal government and one person in a president can effect change by a stroke of the executive order pen. Article 2’s purpose was never to allow one person powers to this magnitude.

Eliminate Article 2 means the real powers of the United States vested in Congress as in budgetary powers from Article 1 Section 8 is severely weakened. Obummer never submitted a budget, congress never held hearings yet money was appropriated. Republicans never objected nor should they as their positions become jeopardized. Passage of legislation as in Article 1, Section 1 becomes a useless exercise. John Mc Cain’s cross the aisle to work with the other side becomes commonplace as political parties devolve into one party and Congressional purpose is kingly ratification. Say good bye to Article 1, Section 1 to 8.

First warning was elite and news media speak as left / right. Parliamentary governments or better understood as Coalition government spoke as left / right but never the United States because we are a Republic. Political debates spoke in party terms but never left /right. Powers in the United States as a Republic are given to government by the people and represented best in the House of Representatives.

To speak in left / right terms rather than party terms eliminates the people as party identification and lumps the political system alone as left / right divide. The threat is the right and few remaining Republican conservatives as the entire governmental system is pure left Socialist.

The masses traditionally always lost the game under the socialist plan as it favors the elites. But how can the masses know this as the last real Republican president was Reagan and he left in 1988. A person born in 1988 is today 29 and grew inside today’s social system and were never exposed to an alternative government view.Is wall street really greedy, cops no good, cell phone, computer and automobile tracking is okay, economic stagnation the norm.

Trump haters despite dangerous and psychologically imbalanced have reason to complain as Trump threatens their money, power and existence. The Trump questions are can he win and turn Federal government destiny or will the Democrats derail his plans. If Trump brings prosperity by tax cuts, will the Democrats be forced to back off. Is Trump like Reagan and only derail’s the Democrat plan for empire temporarily.

Brian Twomey

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

Interest Rate Corridors, Swaps and Yields

While interest rate corridors remains an insightful and important topic to currency prices, markets and monetary policy, to delve further into corridors on a per nation basis offers a far more comprehensive perspective.

Daily Interest rates in AUD, NZD, USD and GBP are not only low but statistically flat on the floor low. Statistically flat means interest rates contain problems in range, location and direction as the view inside current prices reveals a lost and wandering rate in dire need of input to force a meaningful direction.

GBP is most interesting because despite low, the BOE can actually maintain interest rates at current levels into the future. A drop brings interest rates to the lowest depths of lows to match AUD, NZD and USD. Yet a drop must be questioned to the effects on AUD and NZD as interest rates throughout nations are cemented tighter than glue. AUD and NZD interest rates lack ability to go lower.

The current debate inside the BOE to raise, lower or maintain will continue as the BOE must question severely oversold interest rates from monthly averages 1 to 10 years to daily low yet acceptable trading levels.

Fed Funds is severely overbought from a monthly average view 1 to 12 years yet the daily interest rate trade levels are extremely low. The reconciliation is to view levels and averages to ranges. The 10 to 2 year and 10 to 3 month averages are both the same at 1.76 to 1.78.

The spreads are both at 0.87. The spread factors as the current range and the overall range is 0.89 and 0.91 to 2.63 and 2.65. Topside levels bump against the 2.51 average at the 10 to 30 yields. The spread is 0.59 therefore the current range is 1.92 to 3.1. Then the 10 to 5 averages at 2.00 to 2.03 against a 0.42 range means 1.58 and 1.61 Vs 2.42 and 2.45. Ask is the Yield curve negative from 1.76, 2.00 and 2.51 or are ranges to low and problems from 0.89, 0.42 and 0.59.

Actual statistical ranges from 1.76 at 10 Vs 2 and 10 V 3 months equates to 1.43 to 2.08 or 65 points total and 33 below vs 23 points above. The actual 65 point range is far lower by 24 points than the current 89 point spread.

The 10 to 5 spread at 0.42 is actual 1.83 to 2.17 or 34 points total, 17 points above and 17 below from the 2.00 average. The 10 to 30 average at 2.51 and 0.59 spread factors to an actual range from 2.27 to 2.75. The actual range is 48 points or 24 points below vs 24 above.

Interest Corridors are maintained by trading daily interest rates at the extreme low end to protect bottoms, to maintain orderly function in respective markets but most importantly to offer an invitation at acceptable levels to trade a nation’s interest rates. The low end and invitation under new central bank policy tools sacrificed exchange rate movements to drive trading to interest rate markets as volume, liquidity and business in interest rate markets are far more larger than exchange rate markets.

Interest rates are now the new exchange rates and a domination in the market. A fierce competition developed and now exists against each nation’s overnight rates and this is the manner how interest rates became tightly bound together. Nations won’t allow an advantage over the next nation as a move in one nation’s interest rate is met automatically by an interest rate move in all nations.

Previously, interest rate corridors were wide enough to allow a harmonious existence between interest and exchange rates where the exchange rate even became preeminent. The methodology and practice shifted to interest rate corridors as the pre eminent mode to control exchange rates and levels. More importantly, interest rate markets are now professionalized to only the knowledgeable and possibly as a payoff to banks, corporations and money market funds but at the expense of exchange rate traders. Only the professional have access to true interest rate prices.

Exchange rates were far to volatile for this cohort as trade management became more than a full time job to include forecasting, hedges and the point of profit and loss to operations. Proctor and Gamble trades on any given day hundreds of currency pairs. Its far easier for Proctor and Gamble to trade an interest rate as 2 to 4 decimals places rather than 6 decimal places in exchange rates.

Exchange rates in the 1990’s moved 400 and 500 pips per day under wide corridors while today’s exchange rate markets experience barely 100 pip days on good trading days. EUR introduction experienced focus and institutionalization on overnight rates then Overnight Indexed Swaps were introduced to begin the focus on interest rates and away from exchange rates. Interest rate maturities began a slow rearrangement and elimination of certain maturities.. In 2015, the new interest rate program was introduced by central banks to solidify the narrow corridor. The final result is today’s complete focus on interest rates, away from exchange rates and narrow interest rate corridors.

Consider today’s typical 15 point interest rate channel. An interest rate trader only needs a few points to nicely profit. A 15 point channel for an exchange rate trader is extremely tiny and results in small movements. Fed Funds trades easily $100 billion per day while DX Futures on ICE traded 17,000 contracts or roughly $85,000. Australia’s OCR traded in USD millions 3423 Friday on a light volume day while AUD/USD traded barely 150 Futures contracts.

Why the channels is because interest rate traders want rate stability and non movements in borrow and lend rates in order to hold positions and manage money for years. While bottoms are known, upper channel rates are known far in advance as well.
Interest rate swaps for exchange rate purpose includes OIS, Forward interest rates, Basis and Fixed V Float. Fixed Vs Float is argued as essentially the same as OIS for illustrative purposes.

The CFTC’s Weekly Swap Report released every Wednesday states Gross Total Notional Interest Rate Swaps Outstanding in USD and in millions amounts to 236,388, 714 and as cleared trades includes 152, 545, 368 and 83,843, 347 uncleared. Interest rate markets are extremely active for current participants.

The Fixed -Float accounts for USD total 112, 661, 812, Forwards 32,281, 129 and OIS 32, 464, 172.

The Fixed Float by Currency factors to USD 40,930,622, EUR 29,777,558, GBP 7,182,562, JPY 8,722,091 and AUD 6,026,353.

Forward Interest Rates in USD 15,177,674, EUR 10,651,966, GBP 3,156,768, JPY 1,762 and AUD 1,198.

OIS in USD 11,488,263, EUR 10,953,068, GBP 3,242,478, JPY 275,932 and AUD 4,409,385.

Narrow interest rate corridors is seen in length of time in Swap trades starting from 0 to 3 months in Fixed V Float. Note how trades increase in time and duration.

Fixed V Float 0 to 3 months 1,525,083, 3 to 6 months 2,814,149, 6 to 12 months 9,422,743, 12 to 24 months 14,257,903, 24 to 60 months 23,821,183, and 60 + months 60,820,751.

Forward Interest rates 0 to 3 months 5,257,464, 3 to 6 months 7,587,996, 6 to 12 months 13,652,164, 12 to 24 months 5,229,999, 24 to 60 months 552,043 and 60+ 1,462.

OIS from 0 to 3 months 4,128,362, 3 to 6 months 8,051,810, 6 to 12 months 10,851,528, 12 to 24 months 5,355,161, 24 to 60 months 2,137,128 and 60 + 1,940,183.

For OIS perspective and context to weekly views, June 2011 OIS contracts outstanding totaled $3.6 trillion and turnover in the year to June 2011 was $6.6 trillion.

Overnight rates remain fixed in tiny ranges from day to day purposefully to allow the OIS connection to 90 day rates and to establish parties in a Fixed for Floating rate trade. One side borrows while another lends. One side receives payments while the other side pays.

In an OIS Swap, fixed interest payments are swapped vs a variable interest payment. The floating or variable interest is connected to the overnight rate hence again why its in the interest of the swap market for overnight rates to remain steady.
OIS is most important to interest rate views and vital to currency markets because its a short rate / short term financial instrument. OIS as well assists predictions in central bank interest rate rises and falls. Short rates drive markets and prices. Standard Interest Rate Swaps contain far longer durations and lacks the predictive powers and insights of OIS.

Traditional OIS informs immediately to market problems as an early warning because OIS rates rise. Yet low OIS rates informs healthy market functions. Trump, North Korea and possible war should’ve seen OIS rates skyrocket but OIS rates remain low and stuck inside its narrow corridors because of the large monies tied to its current rates.

Large amounts of the world’s money is channeled into narrow interest rate channels against the same old non move able daily interest rates. This system doesn’t allow nor does a need exist to move interest rates. Exchange rate movements suffer in OIS and Swap arrangements. Interest rate curve averages on any given day barely move 1 to 2 points to offer a non movement example. The risk is OIS rates jump higher due to crash, war or catastrophe and the vast amounts of money tied to OIS is lost as all the eggs remain in one basket.

GBP OIS rates Friday were 0.066, USD 0.155, AUD 0.19 and 0.33 for NZD. One aspect to GBP is OIS rates are not a target price for the BOE. AUD, USD and NZD is quite a different story as those rates maintain a high significance. However NZD remains the currency never to worry because the system, operation and function of RBNZ interest rates is smart, well thought and functions extremely well. The RBNZ is always prepared because they build protections against any world action. Remarkable brilliance in the RBNZ.

OIS rates are ready to finally move and the move contains potential to become significant as current rates in relation to its channels sit at polar opposite extremes. Due to narrow channels however, OIS could trade to a higher range and reach destinations slowly.

 

Brian Twomey

 

 

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

EUR/NZD Vs NZD/USD: Levels, Ranges, Targets

Here’s a picture of 1 year EUR/NZD Vs NZD/USD Vs NZD/EUR.  The noted point is EUR/NZD is the opposite pair and opposite Correlations to NZD/USD and NZD/EUR.

http://fxtop.com/en/historical-exchange-rates-comparison.php?C1a=EUR&C1b=NZD&C2a=NZD&C2b=EUR&C3a=NZD&C3b=USD&C4a=&C4b=&C5a=&C5b=&C6a=&C6b=&DD1=10&MM1=08&YYYY1=2016&C7a=&C8a=&C9a=&C10a=&C7b=&C8b=&C9b=&C10b=&B=1&P=&I=1&DD2=10&MM2=08&YYYY2=2017&M=1&btnOK=Go%21

More In Depth picture   http://fxtop.com/en/historical-exchange-rates-comparison-graph-zoom.php?C1a=EUR&C1b=NZD&C2a=NZD&C2b=EUR&C3a=NZD&C3b=USD&C4a=&C4b=&C5a=&C5b=&C6a=&C6b=&C7a=&C7b=&C8a=&C8b=&C9a=&C9b=&C10a=&C10b=&DD1=10&MM1=08&YYYY1=2016&DD2=10&MM2=08&YYYY2=2017&LARGE=1&M=1&LANG=en

EUR/NZD is currently overbought. Extreme sell points are located from 1.6205, 1.6250, 1.6339, 1.6336 and 1.6340, Long points 1.5905.

 

Quick daily Trade. Most important Break points below for longs 1.5893 and 1.5950, Above sell points 1.6108 and 1.6165,

The most bottom is located at 1.5948 and achieves on breaks of 1.5893, 1.5988, 1.5968 then 1.5948.

Current price 1.6145, sell Mortimer sell. You want break lower at 1.6108 as first target then 1.5979 and 1.5950.

 

EUR/NZD

 

338 day average = 1.5493

595 day = 1.5900

848 = 1.5801

1104 = 1.5934

1279 = 5Y avg = 1.5903

1358 = 1.5905

1615 = 1.6073

Current Price 1.6146

1876 = 1.6343

2132 = 1.6869

2387 = 1.7445

2641 = 1.7561

2896 = 1.7739

3154 = 1.7735

3413 = 1.7804

3667 = 1.7897

3923 =1.8039

4176 = 1.8220

4429 = 1.8368

4690 = 1.8450

4766 day = Jan 1, 1999 = 1.8487

 

NZD/USD

338 = 0.7116

595 = 0.6956

Current Price 0.7281

848 = 0.7281

Current price 0.7281

1104 = 0.7497

1279 = 5Y avg= 0.7603

1358 = 0.7620

1615 = 0.7695

1876 = 0.7649

2132 = 0.7554

2387 = 0.7431

2641 = 0.7450

2896 = 0.7377

3154 = 0.7336

3413 = 0.7293

Current Price 0.7281

3667 = 0.7216

3923 = 0.7072

4176 = 6898

4429 = 0.6753

4690 = 0.6670

4766 = 0.6644

 

Brian Twomey

 

G10, Yellen, Interest Rate Corridors: Levels, Ranges, Targets

From a set of failed Mortgages in the sub prime sector, the end result was not address Mortgages but allow the failure and stimulate by 1 trillion. then 2 and 3 to now 4 trillion. Ask yourself how adding 4 trillion to an economic system doesn’t crash the system. How can interest rates travel from 2.0 at the 2008 highs to 0.07 lows yet doesn’t hit deeply in negative territory. How does a 1.93 Fed Funds drop from Aug 2008 justify positive 0.07 under a 4 trillion stimulus. How does DXY hit 103 highs in December and January 2016 then drop to current 93 lows despite 3 interest rate rises.

The higher goes Fed Funds then the more DXY is strangled to travel higher as the interest rate channel compresses. June and December 2016 when Fed Funds was 0.41 and 0.66, DXY jumped higher and operated as any currency upon an interest rate rise. But 0.66 Fed Funds was the turning point as DXY on the upside didn’t have ability to climb as the interest rate corridor failed to allow it to rise. Queen Yellen then raised Fed Funds to 0.91 in March 2017 and the DXY rise was over from 103. Upon 2 rate rises to current Fed Funds at 1.16, DXY now sits 1000 pips lower at 93.

To demonstrate, Fed Funds at 0.91 when DXY was 103 revealed a corridor for DXY from 102.73 to 101.05 for a 168 pip range. DXY 103 was out of range and headed lower. If today’s DXY at 93.69 is viewed from 0.91 then the range compresses 156 pips from 93.69 to 95.25. The same 103 DXY from today’s 1.16 reveals a 39 pip range from 103.39 to 103.01. At today’s DXY 93.69 from 1.16 Fed Funds then the range compresses further to 17 pips from 93.81 to 93.88.

Queen Yellen’s program and the sudden enthusiasm to raise accomplishes the goal to lower DXY yet Yellen also knows to restrict the money supply is to see DXY travel far higher. This explains why Yellen is in excuse mode to rescind the money supply. If Yellen rescinds then look for the slowest drop on record

DXY is now operating inside a 20 basis point interest rate channel for months on end with focus on the downside. The 20 basis point channel corresponds to the current 17 pip DXY range. If Yellen can continue to strangle the interest corridors then she can raise again and continue to lower DXY. Its the have your cake and eat it too strategy yet this experimental strategy will one day see its end and it won’t end correctly.

As Queen Yellen killed the Corridors, she naturally forced EUR higher by osmosis. The telling aspect to the EUR rise is not only is EUR operating inside a 20 basis point corridor as well but its interest rates that will stop EUR rises because of the many resistance points built into interest prices.

What also explains how Yellen can hold 4 trillion yet raise is to hold the interest corridors in tiny ranges. The 4 trillion becomes unaffected. As long as money markets function correctly and profit is earned then Yellen can continue to practice unknown economics.

EUR/USD Big line above 1.1795 Vs 1.1679 below.

GBP/USD. Big lines above 1.3013, 1.3020 and 1.3048 Vs 1.2947 below.

USD/JPY. 110.12 Vs 109.85 and 109.50.

EUR/JPY. 129.74 and 130.20 Vs 128.77, 128.81 and 128.45 below.

 

Brian Twomey

G10 and North Korea: Levels, Ranges, Targets

And the effect North Korea has on the currency price? Big fat Zero. Since America’s Bummer allied to the Muslim Brotherhood by the 2009 Cairo speech, strengthened ties to Iran and adopted the TPP Trade deal, the world was placed on the war front over the past years.

If the Korean War negotiations as well as Slick Willie Clinton’s payoff to the North Koreans to allow the build of current missiles is the guide, one will note how the North Koreans are the best negotiators the world has ever known. They will bring the world to the brink then back down. Does anyone honestly believe the North Koreans would risk utter disaster by firing a missile. And especially since the North Koreans have been working on the current missile program since the 1950’s when the Korean War ended. Why not build missiles as the Russians then Chinese left the North Koreans as allies since the Korean War and the South Koreans remain enemies. The North Koreans are surrounded by enemies and weak alliances.

The Democrat Party again led America down the deep dark path to destruction. True to form, this time it was a foreign policy disaster as was the Iranian hostage crisis, Vietnam, WW2, WW1 and fear of the Chinese to not eliminate Pyongang. The Democrats must be making the world “Safe for Democracies’ as was the Wilson slogan.

The overall effect to the currency price will be another fat Zero, Zed. Did the currency price move when the North Koreans tested missiles the last 20 times.

EUR/JPY. I’m watching current break points at 127.90, 127.53 and 127.47. Breaks will see 125’s. Above break point is located at 131.49. Rough resistance area today is located at 129.65 and 129.71. Resistance remains built into current prices and EUR/JPY is far out of kilter to EUR/USD and USD/JPY.

EUR/USD. Break points 1.1713 Vs 1.1785.

USD/JPY above break point is 110.21 and below `109.86 and 109.69.

GBP/USD Break points 1.2978 and 1.3003 Vs 1.3037 and 1.3067. Not only is the BOE aware of North Korea by protecting GBP but GBP/USD is priced not to move.

 

Brian Twomey

Moving Averages, Counting Systems and Formulas

Moving averages or my term averages that move was first employed by hedge funds and central banks upon the 1972 free float. Sophisticated traders later adopted moving averages as a form of trading because interest and exchange rates began quoting as averages. Further, moving averages contain built in statistical components yet many types of calculations derive from a moving average. The derivation of numbers and which average to use in trading derived from ancient cultures long before Jesus Christ and represented as BC.

Today’s Arithmetic counting system is based on 0 to 9. This is 10 numbers and 5 is the middle number. The Hindu – Arabic number system derived today’s base 10 system. Today this is represented and termed the Geometric numeral system as 1, 10, 100’s, 1000’s, 10,000’s, 100,000’s. Notice the 5 multiple as the foundation but further note this Geometric system is where is derived the decimal system. Exchange and interest rates are based on the decimal system.

In the 6th century, a Hindu by the name Bahmagupta invented the numeral 0 and the Arabs spread this 0 to the western world. Arabs today term their number system Rakam-Al- Hind to represent the Hindu number system. The Mayans in the 4th century also adopted 0 yet again the Mayans only had 20 numbers to use as a counting system. Note again multiples of 5.
The Egyptians invented the Fraction system. They used 1 as the numerator. Thank the Egyptians for calculating today’s reciprocal exchange rates.

To read my Z Score book is to understand Biblical numbers and derivations. The Romans, Greeks and Israeli’s used numbers representative to their Alphabetic system and those numbers only contained about 20 numbers. Early counting systems matched numbers to symbols and the idea was to simplify. Again multiples of 5.

The number 5 is the foundational number to the modern world and its only natural markets were built on the number 5. Moving averages then should be built upon multiples of 5.

My moving average system contains averages as 5 days, 10, 20, 50, 100, 200 and 253 days. To account for holidays in every nation as well as actual trading days, 253 was factored as the average. New Zealand and the United States contains 253 yearly trading days. Further, 200 is an outlier number as a trading day therefore 253 was the numbered insight to 200.

A moving average factors overall to either a Standard Deviation or a logarithm. Logarithms are the percentages as EUR dropped 1%, 2% or rose 0.32%. Thanks to Karl Friedrich Gauss, Karl Pearson, Pierre Simon Laplace and Abraham De Moivre for giving the world the Standard Deviation, Correlation, Normal Distribution and Probabilities.

The trading world and moving averages begin with a Standard Deviation and 5 types of deviations exist as Standard Deviation, Standard Error, Standard Error of the Estimate, Mean average deviation and absolute deviations.

Deviations and moving averages spreads to Z Scores, T Scores, F Stats and Stanines. Stanines are Standard Nines and I believe its where Gann developed the Gann system of Nines. From deviations we go to Percentages, percentiles, Probabilities. Cumulative percentages.

From averages we to to Simple, Exponential, weighted, non weighted.

Correlations take calculations to R2. The BOE for example loves to calculate exchange rates by R2 and T Scores. They love to calculate Yield Curves by Variances.

Distribution of prices takes calculations to Standard normal curves, Degrees of Freedom, One and two Tailed distributions, Confidence intervals, Probabilities. and RHO.

Then we calculate Regression and Multiple Regressions. Regressions contain Residuals and the best chart on the planet.

A moving average is an old reliable indicator and contains many, many avenues to use in trading accurately. The key is choose your calculation and master it.
Brian Twomey

 

G10 and Sonia Reforms: Levels, Ranges, Targets

 

 

 

UK’s main interest rate termed Sonia was introduced in 1996/1997 as an average calculated rate. The new reforms proposes to recalculate Sonia as a Volume Weighted Median and the same as the Fed’s changes to the Fed Funds rate March 2016. View the Fed’s Dot Plot for a chart. The volume transacted is then calculated to a Median price and its the trade able interest rate.
The difference between the average and Median price is 2 basis points. Most affected is Overnight Index Swap rates or OIS. Subtract 3 month Libor from Sonia rates and an OIS rate is derived.

Monday August 7th, GBP OIS traded 0.0692, Friday August 4, GBP OIS rates traded at 0.0133, August 1, OIS traded 0.0739 and January 3 OIS traded at 0.1525. Corresponding USD on August 7 traded 0.1513, August 4th traded 1.04, August 1 OIS traded 0.1505 and January 3, OIS traded 0.3387.

Most basic to OIS are borrow and lend rates for banks. Current OIS rates are cheap and extraordinarily low. See AUG 7 GBP Vs USD OIS at 0.0692 Vs 0.1513, a spread of 0.0821.  Low rates overall informs a proper functioning bank system. Should stress or crashes hit markets then the OIS spread skyrockets. USD OIS in 2008 for example jumped to 3.65 and 5.0 for the UK. The narrower the spread, the better are market conditions to borrow and lend as monies exist to borrow and lend. When OIS is high, the cost to borrow and lend is to high. The worst of OIS is money shortages may exit. US dollars might be to costly to purchase.

As OIS rates jumped in 2008, Central banks had no choice except to drop interest rates to bring the banking system back to borrow and lend normalcy by lower OIS rates. Market stress and crashes are threats to the banking system. Stimulus remains the questionable venture as banking systems became flooded with money and allowed OIS rates and overnight rates to remain extraordinarily low over years. Banking systems learned how to operate within OIS rates in far smaller corridors today as opposed to the historic wide channels from previous decades.

Note for example Sonia’s 2 basis point proposed changes to today’s overall UK’s 20 basis point interest rate corridor.. At 20 basis points is quite high and normally runs about 10 to 15 basis points wide. Missing links exist to today’s GBP interest rates and it will affect GBP.

For further interest read Guy Debelle’s speech at the RBA’s on the Basis. See the RBNZ papers as the RBNZ researchers write with an understandable and easily explainable style to market concepts. Ironically, it comes naturally to RBNZ writers.

GBP/USD break points today remains 1.2909 and 1.2938. Long time friends and followers understand break points are 200 pip moves thereabouts.

GBP/USD today msut breaks are located at 1.3010 and 1.3076. A break of 1.3076 sees next 1.3087 and 1.3108 to be lucky. Below 1.3010, then 1.2999 and 1.2993 becomes next target points. My advice as GBP is missing its triggers is leave it alone.

EUR/USD Break points for today 1.1770 or 1.1843 then sees 1.1777 and 1.1772 below or 1.1910 above.

EUR/JPY rough spots above at 130.93, 131.01 and 131.17.

USD/JPY break points are located at 110.46 or 110.73.

 

Brian Twomey

G10 and NFP: levels, Ranges, Targets

Non Farm Payrolls at 201 was against many resistance points from 200 to 214. The break at 214 was a must to see 226. Non Farm at 201 broke the 1 and 2 year monthly averages as well as the 7 and 6 year monthly averages. At 201, it cleared the 6 year average at 200.83. From 183 expected, Non farm rose by 18,000 jobs yet lower than July’s 222.

Non farm at 201 performed as expected by the averages. At 201, it broke the 1 year and went to the 6 year and this move is highly normal from month to month. The big break was 226 and this point failed. Overall, NFP averages remain extraordinarily good for higher job gains over the months ahead. Again, 300,000 is easily achievable. The averages now reshuffle to form new targets for next month. No difference between a currency price Target and NFP target as both are the same creatures and driven by averages.

GBP/USD. Overall, Big break lines below are located at 1.2932 and 1.2906 then far lower for GBP. Slightly overbought from 1.2906 and overall nothing special regarding 1.2632. Nothing special regarding GBP overall as it needs input for further direction.

GBP today awaits breaks at either 1.3046 or 1.3065. Below 1.3046 targets, 1.3023, 1.3006 and a rock solid line at 1.2990. Above 1.3065 targets 1.3090’s and 1.3080’s. The big line break is located at 1.3122.

AUD/USD. Big line breaks above are located at 0.8038, 0.8170 and 0.8224. Below breaks are located at 0.7894, 0.7814 , 0.7791 and 0.7767. AUD as usual is in a rough location driven by uncertainties in the Majors currency price and more uncertain monetary policies.

Long points for today are located from 0.7894 to 0.7909 while shorts are found at 0.7974 against rough resistance at 0.7960 and 0.7966.

EUR/USD big break lines for today are located at 1.1826 and 1.1753. Big break line overall is located at 1.1406. EUR contains a serious range problem which means current price must move and short is the way. EUR/USD range problem is suspected to derive from EUR/JPY.

EUR/JPY is out of kilter in its price location as it trades far above EUR/USD and USD/JPY on a 1 year basis. USD/JPY is the problem as it must rise or EUR/JPY must travel far lower. The prevention higher for EUR/JPYis explained by resistance points built into its price daily for last few months. They want EUR/JPY lower. Solid supports overall are located at 127.84, 127.56 and 127.34.

Above for today, rough areas at 130.80’s and 130.90’s. Long points for today are located at 129.84 to 130.17.
USD/JPY. Wide territory exists from break points at 110.83 to 111.80. Not much changed in USD/JPY over the last week. Bottoms remain supportive at 110.19 and 110.12.
Brian Twomey

AUD/USD: MA’s

 

AUD/USD Break Points are located below at 0.7894, 0.7814, 0.7791 and 0.7767 Vs Above 0.8038, 0.8170 and 0.8224. Break points derive from short to long term averages at 337  to 4762 days. At 4762 days traces to January 1 1999,

AUD/USD is overbought from 50 to 253 day averages and are located from 0.7753 to 0.7554. Lower for AUD then becomes oversold at 5 to 20 day averages  from 0.7939 to 0.7955.

Below long point extremes are located at 0.7901, 0.7881 and 0.7828. The noted point is extremes bump against 0.7894 and 0.7814. Short point extremes are located at 0.8009, 0.8031 and 0.8050. Most important is 0.8038 at the 4175 day average and dates to about a 12 year average.

Friday’s Non Farm Payrolls forecast was sell 0.7990 to 0.8004 and actual top and reverse saw 0.7976 and just before the 0.7985 break point. Bottom long was forecast at 0.7926 and saw 0.7912. Bonus long at 0.7912 as AUD bounced to 0.7926.

Overall, AUD remains between vital break points from 0.8038 to 0.7894 and its status is not overbought nor oversold. I would focus on the downside due to severely overbought 50 to 253 day averages and the downside has miles to go before oversold becomes a concern.

Here’s the MA average line up.

337 day = 0.7545 overbought

593 day = 0.7465 overbought

846 day = 0.7831

1103 day = 0.8170

1279 day = 5 y average = 0.8477

1358 day = 0.8574

1614 day = 0.8871

1874 day = 0.8957

2130 day = 0.8915

2385 day = 0.8801

2562 day = 10 y average = 0.8805

2641 day = 0.8794

2894 day = 0.8697

3153 day = 0.8599

3411 day = 0.8508

3590 day = 14 y average = 0.8444

3665 day = 0.8405

3922 day = 0.8224

4175 day = 0.8038

4429 day = 0.7894

4688 day = 0.7814

4762 day = 0.7791 January 1 1999, 18 year average.

Despite 0.8400’s, 0.8800’s, AUD is bumping against the averages and is oversold yet this means light years of downside exist without significant breaks higher. The break begins at 0.8038 and 0.8170. Overbought for AUD begins at 0.7400’s, 0.7500’s and travels to 0.7700’s. The first break begins at 0.7894 and 0.7814.

AUD/USD’s usual problem is price location as its price is derived from the Majors in USD, EUR and GBP. Currently, USD, EUR and GBP are in uncertain flux from its own uncertain price and haywire monetary policies. AUD and NZD are the steady ships in the ocean.

Upper most for AUD/USD at 0.8957 Vs bottom at 0.7465 then contains an historic mid point at 0.8211. From 0.8915 to 0.7465, mid point is located at 0.8190.

 

Brian Twomey

 

 

G10 and NFP: Levels, Ranges, Targets

NFP at 183 expected contains massive resistance at 177, 173 and 172. From 183, that’s 6,000 and 10,000. and not enough to move the currency price. That means currency price ranges rather than breakout and volatility. Above, 226 and 247 are targets but along the way contains 200 to 214 then home free to 226 and 247, halfway is 236.

Overall, 50,000 from 183 above means currency price breakouts and volatility must be seen at 233. Below 233 then currency prices range. Below, 50,000 comes at 133. Do we see 133 against all the many supports points at 130’s. Doubtful. We could easily see an as expected forecast and range trades rather than big moves.

My forecast is NFP higher which means EUR/USD drops but quickly reverses and trades in a range. The central banks see range trades and prepared for ranging prices.

Thank respected Goncalo at fxstreet as NFP forecast plans to become regular month to month. Past forecast dating years were extremely close to perfect. Off the mark forecasts weren’t far off. Much work involved though yet nobody is doing the necessary forecast work.

EUR/USD. Big point break above 1.1920 and 1.1977. Below watch 1.1833 and 1.1817. If an as expected forecast then buy bottoms and sell tops. NFP above 233, look for EUR/USD much lower. If 130’s NFP then look for 1.1977 ish. Although I don’t see 1.1977.

GBP/USD. Above break points 1.3200 exactly and a giant break point at 1.3247 but not expected to be seen today. The way higher is located at 1.3172, 1.3184 then 1.3200. Below, 1.3105, 1.3093 and 1.3073.

AUD/USD. Above 0.7990 and 0.8004 Vs below 0.7944, 0.7939 and 0.7926.

NZD/USD signal pair to all Asia and insight to the majors. A fantastic, terrific currency pair. Above 0.7438 and 0.7477 Vs below 0.7421 and 0.7392 and 0.7382.

EUR/JPY. Above 131.14, 131.28 then the Gap to 131.89. Look for target at 131.44. Below, 130.46, 130.29 and 130.13. Look for longs at 130.13 to 130.29.

USD/JPY. This is a minor, minor currency pair. Why classified as major is because of the Inflation target, Yield curve experiment. Above 110.22 than gaps to 111.18. Should dead stop and reverse at 110.68. Below, 110.01 then 109.63 and 109.56.

 

Brian Twomey

NFP: Preview and Forecast

Non Farm Payrolls 183 expected Vs 222 previous is not only within the 50,000 range but is located just below the 1 year average at 186.50. Supports below begin at the 8 year monthly average at 160.23. Further supports begin from the 25 to 78 year monthly averages at 137 to 120’s. The overall Non Farm Payroll number is fast approaching massive bottoms and many supports. The immediate supports are located at 177, 173 and solid at 172.

Above 186.50 next comes 189.01, 194.25, 199.50, 200.83, 206, 209 and tracks to the highest point at 226. Once above 226 then the Non Farm number resides above every average and Median line from 1 to 78 year monthly averages. From 183 to 226, this means 43 thousand jobs.

Overall the averages are low, flat on the floor and highly oversold. First target is 247.59 then 266.71. Longer term targets are located at 350,000. From the averages alone, 300,000 is easily achievable. I’m looking for targets at 226 and 247.59 due because not only are averages low and oversold but recent data encourages a higher NFP longer term.

Continuing Claims appears stabilized at 1.95 to 1.96. Why follow Continuing Claims as an indicator is because the overall range is 50,000 and matches NFP’s 50,000. ISM Service remains above 50.0 yet as I read Welles Fargo’s analysis, job gains were broad based across all categories. Factory Orders reported July minus 0.8 and today forecasts higher at 2.9%. From minus 0.8 to 2.9 is a far margin which means news releases will be volatile for the first time in years.

GDP at 2.6 on the surface appears good but the overall report contained problems. Exports were good from a lower DXY but again Imports beat exports. Personal spending and Wages were lower, savings rate lower. Durable Goods at + 6% was the result of Aircraft parts and orders. Subtract Aircraft, Durable Goods was actually +0.1. The overall question to the latest economic releases is has the United bottomed and heading higher. On the surface without running the data, the answer appears affirmative.

Overall NFP’s and economic data contains political risks. Trump’s approval rating by reliable Rasmussen Polls are currently 38% and dangerously low. Traditionally, 30% is the Presidential threshold. At 30% and below, Presidential support from his own party disappears as well as policy support. Democrats will increase their attacks. Below 30%, Trump is vulnerable to Lame Duck status and no chance of passage to taxes, Immigration or any policies. Below 30%, look for the impeach crowd to gain support. Below 30%, economic confidence in Trump disappears.

China is currently running military exercises and this is dangerous as China counters current United States / South Korea military exercises. The message from China is we support North Korea. A shot fired in Asia brings a new dimension to economics and downward drift for the entire world.

 

Brian Twomey