If the past is prologue and under a perfect market structure in place for decades upon decades, how can Sonia not jump as usual its 20 points overnight to break 0.3075 and now trade at either 0.4179,0.4004 and 0.3839. At 4175 is the 7 year monthly average then the 6 year and 5 at 0.3839.
Its almost impossible for a current market structure to change but the question to normalization after an interest rate adjustment is of profound concern. USD is a fairly perfect system and its ability to normalize is seen within 1 to 2 days. USD holidays and the 1 day radical drop in Fed Funds takes 1 to 2 days to normalization. Sonia at 40 is non normal as its severely out of bounds to its monthly averages from 1 to 8 years. My belief was 3075 would break and slowly trade higher because 40 bumps dead against the trend line. Sonia plowed through its resistance points.
The side bar issue and lazer focus is I’ve been calculating for all nations interest to exchange rates 2 and 3 times per day for almost 3 years. Interest rate normalization means it includes or not the exchange rate. Prior to the new interest rate structure, central banks allowed exchange rates to roam freely and the market decided the proper price. Under the new market structure, central banks decide plans, levels, ranges and targets for exchange rates.
GBP/USD. So far GBP is okay. The break points above remains 1.3129, 1.3136 and 1.3139. To add to upside resisance points, 1.3158 was included as the bext break point. Below, GBP must break 1.3064 to target 1.3037 and 1.3018. In days ahead, we should easily see a break of 1.3139 to target upper 1.3200’s. I’ll continue follow through until the GBP situation is complete.
EUR/USD. Below 1.1599 then comes 1.1582, 1.1568 and 1.1554.
EUR/JPY first break higher is located at 132.91.
AUD/USD faces massive resistance at 0.7673 and 0.7675.
USD/JPY 114.45 must break to target 114.59 and 114.87. Below watch 113.95.