RBNZ, NZD, 5 Day Interest Rate Rule

President Hoover after 1929 crash introduced the 3 month Interest rate to fund Government short term.
America was broke after the crash and all wanted bailouts.
Hoover refused otherwise Government would’ve been broke.
Then began 3 month Interest rate to finance governments. All governments then adopted 3 month interest rates. Canada was first.
3 month Interest rate was first and oldest rate. Exist today as most vital interest rate.
In currency trades, exactly what are you trading. Well the 3 month Interest rate. Despite no trader knowledge, they trade day trades by 3 month interest rates. It sets price boundaries and prevents prices from traveling far off course.
                             5 Day Rule
If the 3 month rate moved 5 basis points lower or higher within 5 days then Central banks will cut or raise.
Why 5 days is because traditional markets to normalize interest rates took 5 days. Means 5 days good Volatility.
5 days alerts traders to cut or raise and how to position trades.
Its central bank offer to free trades, free money.
                       NZD Example
90 Day Bank Bill Yields 5 days = 1.26 -1.23 or 3 Basis Points.
Doesn’t qualify to move OCR.
Today’s Rate = 1.23. And Today’s 3 month Bank Bill Reference Rate quoted by NZD Financial Markets Association = 1.24.
Doesn’t qualify to cut or raise.
Qualifies as no OCR movement at today’s meeting.
Only rare occasions does central banks move interest rates without alerting markets and traders.
Central banks stick to Market scripts.
Today’s markets as in past decades of markets contain a structure and its imperative for traders to understand what the structure is all about and how it operates to trader advantage.
                    Brian Twomey

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