DXY for the week traded 50 pips, 115 for USD/CAD, 131 USD/JPY while EUR/USD traded 67 pips to GBP/USD 162 and GBP/JPY 259. Currency markets contain 2 trade choices to either trade exactly as DXY pip for pip or trade without. To trade without DXY then means currency pairs trade a percentage of DXY but DXY is always at the center to any trade.
USD/JPY Vs USD/CAD
USD/JPY Vs USD/CAD tops at 135.37 and 1.3603 or a difference of 66 pips. Rearrange USD/JPY 1.3537 Vs USD/CAD 1.3603. USD/CAD trades 66 pips above USD/JPY.
Bottom: USD/JPY 134.01 vs USD/CAD 1.3467 or a difference of 66 pips. Rearrange as USD/JPY 1.3401 Vs 1.3467 USD/CAD. USD/CAD trades above USD/JPY by 66 pips.
Crossovers to USD/JPY and USD/CAD are possible at 1.3502.
Both USD/JPY and USD/CAD trade 68 pips today or 136 pips for a full range. This means vital points are located every 8 pips. Everyday the USD/JPY and USD/CAD relationship adjusts slightly to the daily interest rate changes.
The interest rate parity curve dropped from 1.0007 to 1.0006. Parity curve 1.0006 X USD/JPY = 134.69 then divide = 134.60 or 9 pips.
USD/CAD X 1.0006 parity curve = 1.3543 then divide = 1.3526 or 9 pips.
DXY 13 pips as 104.13 Vs 104.00 or every pip valued at 6 pips
For yesterday and today trades: USD/JPY and USD/CAD were forced to trade more than DXY and explains why DXY traded 50 pips this week.
By a low and to lower the parity curve limits trade ranges by shortening daily ranges. The parity curve is determined by trade and distance to interest rate maturities. Flatten maturities lowers parity curves.
If the Parity Curve was raised for example to 1.0009 then 20 ish pip ranges would trade instead of 9 pips to USD/JPY and USD/CAD.
The last Fed raise by 25 points raised Fed Funds to the full 25 points to 4.58. Actual should’ve been 4.46. If the actual 12 points was granted the Parity Curve today would trade 1.0014 and great movements. By raising Fed Funds by 25 points lowered the Parity Curve to 1.0007.
Central Banks not only control the most valuable trade tool as the Parity Curve but they limit market movements on purpose.
The RBNZ raised OCR by 50 points. The RBNZ Parity Curve is located today at 1.0007. All central banks report Parity curves at the same 1.0007 vicinity.
Overall, those central bankers controlling markets are not only extremely intelligent but just as dishonest by killing off markets.
Brian Twomey
BRIAN TWOMEY ON TRADING 