EURIBOR, FED FUNDS 3 month and USD
Hoover after the 1929 crash positioned for the first time government fund itself in the short term. T Bills were born and the most vital 3 month interest rate, a rate adopted by every nation on the planet and remains most important today.
Euribor’s slash to 5 maturities from 8 raised the top maturity by a few points and by osmosis the 3 month rate followed. In the last 3 weeks, Euribor 3 month ranged from -316 to -0.320 but settled between -0.318 to -0.320 since Dec 3rd official ECB changes.
-0.318 to -0.320 means 0.682 to 0.68. A higher negative means a lower rate as for example -0.321 = 0.679. and -0.315 = 0.685 Alternative is USD 3 month range from 2.41 to current 2.45 and appears far from Euribor but taken both from total interest averages USD at 1.0027 Vs Europe at 1.0108 then the range is actually 81 points and on the high side by at least 10 points. Tomorrow’s trading, either USD rises or Europe drops but USD is the leader and it decides while Europe and all nations follow. Yield V Yields is an erroneous indicator.
USD based on 2.45 means USD currency pairs at 3 month. USD/JPY 113.69, USD/CNH 6.9257, USD/ZAR 14.3770, USD/CAD 1.3456, USD/PLN 3.8147, USD/CHF 0.9964 USD/SGD 1.3787 USD/MXN 20.3075, XAU/USD 1247.34 USD/ILS 3.7614
EURIBOR V USD Interest Rates
Yesterday Europe Interest rates 1.0108 Vs USD 1.0027, Today 1.0114 Europe Vs 1.0022 USD, or 92 points, up 9 points from yesterday. Europe rose 6 while USD dropped 5 points.
3 month Europe today -0.316 Vs USD 2.41, a meaningless spread, no help to exchange rates, interest rates or any financial market price.
Reported yesterday USD/JPY 113.69, held, USD/CAD 1.3456 held, XAU/USD broke 1247 to 1249 then dropped to 1242.
Its impossible for the 3 month interest rate to ever leave markets. Highlighted here is trade market prices, exchange rates and pure interest rates by understanding interest rates.
No other way exists for 1 and possibly 2 day trades than by interest rates.
EUR/USD for example contains 2 sides, EUR and USD. 2 ways to view this relationship, by Europe and USD interest rates or by pure USD interest rates alone since USD dominates all market prices, by all, this includes commodities, yields, stock markets. Interest rates offer targets, ranges and trade able levels in between. Far easier to understand interest rates and especially currency trades.
EURIBOR, USD, EUR and Draghi
1st lesson to exchange rate trading to yesterday’s 1.0114 and USD 1.0027 interest rates is day trade levels, ranges and targets were known 24 hours prior and no mysteries exist to today’s trade.
Draghi knows quite well today’s levels, ranges, targets. The EUR will trade to its levels, ranges and targets no matter what Draghi says. Draghi is especially irrelevant to longer term target trades. His words either allow trades to progress or hit targets or a currency pair trades against targets in which case, add a lot, wait to target but overall to add a lot means Draghi offered a market gift against extra profits.
EUR/USD is going miles higher, this we know. Sorry but Draghi’s self indulgent importance factors to irrelevance especially in these new days of controlled exchange rates by killing interest rates. Draghi can release bombshell news, still EUR may travel 100 pips and in 1 direction. I’ll demonstrate. EUR/USD bottoms 1.1306, 1.1307, 1.1313, Tops 1.1420, 1.1427 and 1.1433. Big break point 1.1457 for higher or big reverse. EUR/JPY Bottoms 128.28 and 128.36, Tops 129.59, 129.66, 129.73, Big break point for higher or reverse 128.97. EUR/AUD Bottoms. 1.5623 and 1.5633, Tops 1.5787, 1.5781, 1.5800. Big break Point 1.5778,
Euribor, USD, EUR/USD, EUR/GBP
Euribor today and next 24 hours 1.0115 Vs USD 1.0028. The comedy central of exchange rates not only continues but a reflection of new structural changes and here to stay since 2014 study and 2016 introduction. Note all trading life begins at parity.
As written much, forecasting and day trading became a new game as the old methods no longer counts. Trading platforms however can’t ever change as they are wired to interest rates.
Highlighted yesterday as EUR/USD and EUR cross pair ranges and all ranges held through draghi. Despite bombshell No QE, growth to the downside, EUR/USD ranged 60 pips and not even 1 direction. EUR/GBP roamed 50 pips.
What’s EUR/GBP , its USD/EUR or opposite pair to EUR/USD. Pre interest rate changes on Draghi remarks 100 to 150 pips.
Next 24 hours USD/EUR = 0.8764, 0.8783, 0.8797, 0.8820, 0.8834. Translated to EUR/USD = 1.1319, 1.1337, 1.1367, 1.1385, 1.1410. EUR/USD= set by ECB wide. 1.1222, 1.1289, 1.1294, 1.1415, 1.1483.
Translated to USD/EUR = 0.8911, 0.8858, 0.8854, 0.8760, 0.8709. EUR/USD break Point for higher, or reversal 1.1452. Do we now better understand exchange rates and trading. This not seen in print
Brian Twomey Trades available contact email@example.com