Queen Yellen offered not only a raise against a dangerous overbought Fed Funds but she upped the volatility game therefore expect more volatility moving forward. Draghi is the best of the wayward central bank heads as he confirmed what we learned from Queen Yellen, volatility is here and will remain until the central banks close the Gaps. If Draghi remains on hold long into 2018 then he places severe pressure and volatility on CHF, DKK, NOK, SEK as all priced interest rates below Europe as is their self defensive posture to protect bottoms.
Far more interesting outside of G10 are emerging market currencies and positions of Repo rates because its incumbent upon Repo Rate nations to price above Reserve Ratios from 3% to 10% as world Reserve Ratio standards. ZAR for example cut in July, Russia cut in Oct. More Repo rate nations will cut and overall emerging market nations won’t escape the volatility offered by Draghi and the Queen. Poland and PLN by far lead all Eastern Europe nations followed easily by a smart central bank in Romania and RON.
Russia is most interesting as they upped defense spending due from US sanctions and now the current Russia deficit runs about $38 billion. While Democrat focus remains destroy Trump, Russia continues to gain chaos and inroads into the US. Failure to recognize Russia in severe enemy position will see much grief in US/Russia relations. Watch RUB volatility.
Volatility means we upped my Statistical Price Path game from roughly 50 pips per pair, per trade to right at 70 pips depending on the pair yet overall our positions run short, to daily to longer term.
USD/JPY and JPY cross pairs are all on the verge of significant breaks and its JPY will lead the way in overall market volatility. And why is again due to Queen Yellen’s desire to lower USD so to see higher Inflation. This places upward pressure on Non USD pairs and as well most undesirable for the central banks, AUD is a good example but many examples exist. SEK will become a basket case for destruction if they don’t order their economic game correctly.
USD/JPY break points are now located at 112.42 vs 112.10.
EUR/JPY break points 132.35, 131.87 and 131.55. Most important is 11.87 and current oversold.
GBP/JPY remains inside 148.49, 149.16 and 153.51.
AUD/JPY is trapped between 87.13 and 86.04
NZD/JPY is on the verge at break points 78.61 and 79.02
CAD/JPY 88.05 and 88.09 Vs 89.14.
EUR/JPY leads GBP/JPY while CAD/JPY is the overall risk determined pair to inform NZD/JPY and AUD/JPY. All will break respective points as USD/JPY breaks 112.10.
EUR/USD break points 1.1729, 1.1807 and 1.2013.