DXY V Corn: Levels, Ranges, Targets

 

DXY price at 97.21 is not only at uppermost range highs but it warrants a deep correction. Problem with correction is DXY is well supported at 95.92, 95.54, 95.39 then 94.34 and 94.13. Only a break at 94.13 would see a deeper move lower to 91.97 and 90.39.

Best DXY correction is located at 96.89 and 96.79 and lower is required to challenge 95.92, 95.54 and 95.39. Overall, DXY ranges is located from 95.92 to 98.00’s but don’t push your luck at 98.00’s.

The best shorts on a sell only strategy is 98.62, 98.78 and 98.81 to target 96.89 and 96.79. Short only strategy because DXY’s current price is to high and its impossible to trade long. This short only condition in currency pairs and DXY in particular may last for many many months and DXY is no different from the 28 major pairs.

Overall, DXY isn’t worth the trouble to even consider a worthy trade as far more better pairs exist to consider. GBP for example is currently running on all cylinders and all GBP pairs are great considerations.

DXY Vs Corn Correlations from monthly averages 1 to 5Y as follows: 0.29, 0.02, 0.05, 0.02 and 23%. From 5 to 10 year averages barely achieves 50% correlations. While DXY’s price is to high, Corn’s 356.62 price is to low but Corn faces many hurdles to travel higher from 361.32, 364.45, 369.36 and up to 392.79.

Above 392.79 is required to challenge 439.18 and 467.41.

Ther perfect long point is located at 338.66, 341.88 and 344.09 to target 350.07 and 354.02. Overall, Corn contains its widest ranges from 320.00’s to 600.00’s and the overall strategy is buy drops as 320.00’s is only 36 points from range bottoms.

 

Brian Twomey

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Selected Interest Rates: A Summary

The key to all financial market prices to include exchange rates are interest rates. Interest rates today are dictated by respective national rates as many nations not only left libor but Libor is slated for elimination by end 2019. Every nation is now responsible for the price of their own financial instruments set by interest rates. USD interest rates by trading in its own markets for example prices USD exchange rates, stock indices, USD Gold and Silver and commodities priced in USD.

Every nation views and trades its own interest rates in a unique manner and this is why to report an overnight interest rate alone such as Europe’s Eonia is not enough to understand if interest rates overall are to high, to low, range or will trade to an intended target. A complement of national interest rates must be known in order to trade a respective nation’s financial instruments. Its a large body of knowledge yet interest rate trade to financial instruments is what the 1972 free float currency was intended.

Certain nations allow interest rate markets to move and Canada is the last holdout in relation to its counterpart nations while CHF interest rates trade in small channels.

BRL, SEK, NOK, MXN, ZAR and PLN normally trade in wide channels due to the wide channel prices of respective interest rates. Wide channel means the central banks force financial instruments to move. For INR, JPY, MYR, AUD, NZD trade in smaller channels while GBP is fast approaching interest rate trade in small channels. GBP matched CAD as the best open trade of interest rates but under Sonia changes, GBP, Brexit aside, is losing its status as consideration to open markets.

Viewed from the complement of interest rates per nation is actually the true yield curve as interest rates prices government securities. Interest rates also price FX Forward exchange rates.

An interest rate as it applies to financial instruments represents a support or resistance point and range trades as it applies to trade between interest rates. Trading interest rates to exchange rates and other financial instruments is the true manner to trade as all relevant information from support, resistance, target and range is known.

The key is to trade the correct financial instruments at the correct central banks interest rate release time otherwise traders will trade a non existent price. Certain central banks are wide open to view interest rates while other central banks are adept to hide interest rates. Certain central banks BOE and Sonia for example now force payment to receive interest rates. Smart traders understand how to price GBP in USD or another interest rate to maintain true GBP prices.

Every market price on the planet is highly influenced and complemented by USD interest rates. But its the world order to release times that allows USD to become pre eminent. After USD afternoon release times, NZD, AUD, JPY, CHF, GBP then EUR and CAD dominant the 24 hour market cycle. Afer NZD and AUD, all Asia nations then price interest rates from either NZD and AUD or straight from USD. What governs nations to either price in USD or NZD is times of trade in open markets and more importantly today is balance of trade between nations.

Historically, 3 month interest rate T Bills was predominant trade to finance governments in Hoover’s 1928 market crash then interest rates as known today began trade in the 1960’s.

Below is a partial list of the most vital interest rates in each nation and today’s rates. Most vital to the list as Libor eliminated is interest rates suffer severely from compression nation to nation. This means overall interest rate numbers per nation contain small distances and this compression solidifies low volatility price movements.

AUD. OCR 1.50 3 month 1.82. 3 month OIS 1.45.

NZD. OCR 1.75 3 month 1.88.

EUR. -0.368, 3 Month -0.314 or 0.632 and 0.686.

USD. Overnight 2.40, 3 Month Non Financial Commercial Paper 2.51. 3 Month Financial Commercial paper 2.60. 3 Month T Bills 2.41 and 3 Month Constant Maturity 2.46.

CAD. Corra 1.7375, Money Market Finance Rate 1.7484.

CHF. Saron -0.743. Call Money Rate, Tom Next -0.970. Debt Register Claims -0.781. 3 Month Libor -0.716.

Sweden. Repo Rates. Headline -0.25, 3 Month Stibor -0.024. Reference rate -0.50. Or 0.75, 0.976 and 0.50.

GBP. Overnight Sonia 0.705. 3 Month most vital Sonia and Repo rates by subscription.

Norway. Key Policy rate 0.75. Nowa Overnight Rate 0.74. 3 month T Bills 1.07.

JPY. Overnight Call Rates -0.059. Max traded 0.001, Minimum -0.086.

Brazil. Selic rate 6.50. DI rates 1 day 83.59. Brazil trades USD onshore and offshore interest rates as well as USD spreads, a true currency as intended from the 1972 free float.

MXN. Target Rate 8.25. Tie rate 91 day 8.52. 91 day Cetes rate 8.09.

ZAR. Sabor Repo Rate 6.74.

PLN. . Reference Rate 1.50. Deposit Rate 0.50.

INR. Policy Rate 6.25. Reverse Repo rate 6.00. Bank Rate 6.50.

MYR. Overnight Rate 3.25. 1 week rate 3.29. Bank Negara just instituted USD Swap rates.

 

Brian Twomey

 

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Weekly Trades Mar 17 – 22

 

This Week FX Trades  2311 Pips available, 13 Currency pairs in a perfectly traded Market. Last week + 2500 ish, 2 weeks ago 1768 pips.

NZDCAD was offered this week,  Here’s expected pips per pair for the week.

GBPJPY 274

GBPAUD 330

GBPCAD 321

GBPUSD 182

GBPCHF 131

GBPNZD 170

USDCAD 192

NZDCAD 127

EURUSD 85

EURAUD 37 and 75

EURNZD 139

EURCAD 64 and 66

CADJPY 217

USDJPY 102

 

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Brian Twomey