FX Weekly: EUR/USD, GBP, CHF, Correlations

Most informed commentary to overall currency markets is cross pairs are now aligned to anchor pairs as AUD/CHF for example is now aligned to AUD/USD by Correlations at +99%, NZD/USD to NZD/CHF +99%. GBP/USD to GBP/CHF +99%, and EUR/USD to EUR/CHF +99%.


USD/CAD is correct and a fairly permanent currency market condition Vs CAD/CHF at -98%. The rarely seen yet great shift to currency pairs is now complete by CHF switch and means the 2nd side of the exchange rate no longer drives, controls and correlates to opposite 2nd sided currencies within an exchange rate.


USD/JPY no longer moves and correlates to JPY cross pairs, USD/CAD no longer moves and correlates to GBP/CAD, USD/CHF no longer moves and correlates to AUD/CHF and 2nd sided CHF in the exchange rate.


EUR/USD, GBP/USD, NZD/USD and AUD/USD now correctly correlates to its own cross pairs within the respective universe. A powerful development as the universe now trades together as one unit and it means ranges expand to create more profit potential.


USD/JPY, USD/CAD and USD/CHF now trade on their own without cross pair assistance and are vulnerable to downside potential and diminished ranges. Beside DXY and trade above vital 95.52, USD currency pairs within the 28 pair universe now reduces to 3 currencies as follows: , GBP/NZD, CHF/JPY, GBP/AUD. CHF/JPY by +90% correlations belongs to USD/JPY while GBP/NZD and GBP/AUD negatively correlate -22% to GBP/USD.


USD was once the driving force to currency markets as USD/JPY, USD/CAD and USD/CHF correlated to 15 of 28 currency pairs.


USD/JPY begins the week overbought and oversold to USD/CHF and USD/CAD.
USD/JPY , USD/CHF, USD/CAD


Last week’s long trade to target 114.25 and 114.32 traded to 114.50 highs and short target at 113.41 traded to 114.29 lows. Wednesday highs at 114.37 traded to 114.05 lows.
USD/JPY weekly trade in the past 6 weeks achieved +900 ish pips for 6 trades.


Lesson for Traders


All 6 USD/JPY trades achieved upside and downside targets. No requirement existed to watch screens, charts, use stops or concentrate on the latest market news. The market price is matched to the mathematical trade strategy but never a strategy matched to the price as this never works.


A traders final destination is click on Sunday and exit by Friday without regards to price movements. This allows a trader to live life outside markets. Clearly a hard concept to grasp as most traders watch screens all day and don’t know or trust the price.


USD/JPY this week targets 114.64 and 114.71 then shorts target 113.59.
USD/CHF driving price is located at 0.9337 and targets 0.9168 then 0.9253. Historically and from long term models, USD/CHF lives a constant oversold position year after year.


USD/CAD trades the same weekly story as vital levels are located at 1.2250, 1.2697 and 1.3032. JPY cross pairs for the week are overbought to include richter scale overbought CHF/JPY.


GBP


GBP/USD traded 1.3437 highs last week and prior to reported 1.3445 and 1.3464. Vital levels this week are located at 1.3160, 1.3357, 1.3441 and 1.3459.
Concentration this week are favored GBP pairs as GBP/USD, GBP/JPY and GBP/CHF.


EUR/USD


Longer dated averages remain deeply oversold .and targets 1.1423, 1.1438 and 1.1442 and just ahead of vital break for higher at 1.1451. The downside target is now 1.1049 and 8 pips higher from last week as bottom averages are rising to explain EUR/USD’s neutrality at 1.1300’s. EUR/USD 1.1277 must break to sustain a downside move.


DXY


Same position holds as 95.52 to 97.16 and DXY tops at 98.00’s and 99.00’s.
Overall, currency markets this week are heading for range conditions without dramatic price moves.

Brian Twomey

DXY, EUR, GBP, USD/JPY, AUD, Cross Pairs

Currency prices as usual brought the market to the do or die brink. Bottom pair NZD/USD as the ultimate currency market signal pair trades just below vital 0.6841. A break targets the range from 0.6841 to 0.6890. Lower targets 0.6776 easily.


GBP/USD is hovering around vital 1.3357. As mentioned Sunday, ranges from 1.3357 are found next at 1.3351 to 1.3445 and 1.3156 to 1.3357. GBP/USD big break for higher is located at 1.3453, lower targets 1.3269 easily.


DXY last Wednesday traded to 96.95 and just below vital 97.16 and corrected to 95.84 lows and trades current at 96.08. The range is located from 95.25 to 97.16. The range held since November 15.


EUR/USD big break below to resume the downtrend is found at 1.1277 and aligns to today’s day trade lows at 1.1283 and 1.1276. A good weekly target is also located at 1.1277 where EUR/USD’s price normalizes.


USD/JPY


USD/JPY target as written Sunday at 114.25 and 114.32 completed and traded to 114.36 highs. Weekly lows achieved 113.33. From 114.36, lows achieved 114.05. The trade runs roughly 100 ish pips. USD/JPY contains miles of downside.


USD/JPY Long Term


USD/JPY for the year traded from 102.00 lows to 115.00 highs or 1300 pips. Here’s today FX lesson. Fairly normal yet high ranges for any given year trades 1300 to 1500 pips. This concept was demonstrated by EUR/USD from 1998 to ? 2019 and written on my blog and fxstreet.


EUR/USD traded its maximum 1500 ish pips due to the ECB in 2014 and 2015 to go negative interest rates. USD/JPY from 2016 lows at 98 traded 1700 pips in 6 years or 283 pips per year.


USD/JPY’s 9 year currency cycle from 75.05 lows in 2012 achieved 5000 pips to 125.77 or 555 pips per year, a mid point at 100.41 and 1400 pips from current 114.00’s.


DXY maximum range top highs for the year are located at 98.00 and 99.00’s.


Will USD/JPY trade to 125 or 1100 pips from 114.00’s is answered by expectation to our career criminals, currency analysts and trade services to operate in full force in 20222 as they plot to abscond with every last nickel in your account. Currency brokers now hold the position as assistants and unscathed however all must answer to God in good time.


Further to 2022. Currency prices will trade to a severe slowdown. Today’s ranges will cut by 1/2. Brian Twomey however runs the Louis Vuitton of trade services as we know what’s coming and well prepared for any trading event.


Targets achieved in 2012’s high volatility markets is matched by targets achieved in 2021 under no volatility. All posted exclusively at fxstreet and my blog.


AUD/USD as the big winner over the past month rose from 0.6900’s or 400 pips to now face its test at 0.7253 then 0.7304. Fail to break targets 0.7170’s easily.


EUR/JPY achieved 129.32 as written Monday and a short only strategy begins. GBP/JPY achieved 153.00’s upon breaks at 151.25 and 151.96.


USD/CAD managed to break 1.2840 and 1.2853 to trade to 1.2816 lows and on the way to target 1.2738. USD/CAD’s day trade lows are located at 1.2805, 1.2789 and 1.2773.


EUR/AUD trades at the oversold richter scale lows at 1.5643 and heading higher. Watch EUR/CAD 1.4533. EUR/GBP is included to trade at ricjter scale oversold.


Overall, time for a USD correction higher and risk pairs as EUR/USD, GBP and AUD to travel lower.

Brian Twomey

Long Term Targets: USD/CAD, Correlations, CAD Cross Pairs

Currency cross rates as exchange rates are constructed by 2 currencies and generally from 2 opposite currencies such as EUR/USD and USD/ CAD to combine EUR/CAD. EUR is the risk side as EUR/USD while USD/CAD represents the USD side as opposite. Either EUR/USD or USD/CAD as anchor currency pairs are the main drivers to EUR/CAD prices.


The premiere indicator for price drivers are correlations because correlations provide mathematical proof to anchor pair drivers and Correlation answers many questions such as is EUR in control of its cross pairs, is a double trade located as EUR/USD and EUR/CAD or USD/CAD and EUR/CAD. Are currency markets trading in a risk on mode or favor USD as non risk.


Vitally important because markets trading as risk on mode by EUR/USD and EUR/CAD positive Correlations contain wider ranges and more profit potential than USD/CAD and EUR/CAD.


Correlations never disappear from markets and its impossible to leave currency pairs as a Correlational determination must always exist and found by moving averages. A Correlation is the hidden number from 1.0 to -1.0 and flows in and out of currency prices.


JPY cross pair correlations to USD/JPY relinquished control in favor of anchor pairs such as EUR/JPY to EUR/USD, AUD/JPY to AUD/USD. EUR/USD and AUD/USD are rightful owners to EUR/JPY and AUD/JPY so the universe of cross pairs are correctly trading as one unit.


USD/JPY as an insurgent currency commits a treasonous act to subvert EUR/JPY to its positive correlation side.


USD/CAD’s long held standing as positive Correlations to CAD cross pairs are now gone as Correlations shifted to EUR/USD and EUR/CAD +85%, AUD/USD and AUD/CAD +86%, GBP/USD and GBP/CAD +82%, NZD/USD and NZD/CAD +96%.


How strong is the shift. USD/CAD Vs GBP/CAD -58%, USD/CAD Vs EUR/CAD -64%, USD/CAD Vs AUD/CAD -66%, USD/CAD Vs NZD/CAD -90%. The Correlational shift is solid as a rock.


Currency markets are experiencing massive changes by Correlational shifts as cross pairs retain its rightful position to original anchor pair owners. The FX word for Correlational shifts is Realignment as the first side of the exchange rate re aligns from subversives to rightful owners.


Early warning signs to Correlational shifts are range and price noise vs variation problems to cross pairs. Current offenders are GBP/CAD, GBP/NZD, AUD/NZD, EUR/AUD, GBP/AUD, USD/CHF and EUR/GBP.


Long term trade forecasts hold for 3 to 4 and 5 ish months. Depends on movements.


USD/CAD


USD/CAD oversold supports below are located at 1.2840 and 1.2853. USD/CAD at 1.2900’s contains just ahead the 5 year average at 1.3034. Break at 1.3034 longer term targets 1.3465.


The problem with a 1.3034 break is GBP/USD at 1.3200’s is not close to its 5 year average break at 1.3111 and USD/CAD is overbought from longer dated averages from 1.2600;s and 1.2300’s.


Any price above 1.2893 is open to shorts to eventual break at 1.2850 and 1.2840 to target 1.2738.


Nothing happening to USD/CAD long term and no brainer trades. USD/CAD serves its current purpose as day and weekly trades.


EUR/CAD


EUR/CAD trades a range from 1.4482, 1.4523 to 1.4628, 1.4663 and 1.4696. Massive hurdles continue as next above at 1.4724, 1.4860 then 1.4910.


Long term target trades fails to exist. Best trades are daily and weekly. The only positive is if EUR/USD travels higher then EUR/CAD trades follows.


Weekly trade: short 1.4667 and 1.4677 to target 1.4599. The weekly entry coincides perfectly to day trade tops at 1.4656.


GBP/CAD


GBP/CAD trades from 1.7047 to 1.7131. Above 1.7131 becomes 1.7131 to 1.7229 and 1.7241. Below 1.7131 targets 1.7070. Below 1.7047 targets 1.6955. GBP/CAD is least favored to all CAD trades offered today.


AUD/CAD


AUD/CAD is the top exchange rate pair to the AUD universe and AUD/CHF at bottom while AUD/USD and AUD/JPY are middle currency pairs and trade between AUD/CHF and AUD/CAD.


AUD/CAD hurdles are located at 0.9193, 0.9312 and 0.9446. Above 0.9312 targets 0.9376. Above 0.9446 targets 0.9602. AUD/CAD’s overall target is 0.9376 and a long drop trade strategy. A long drop strategy informs AUD/USD higher. AUD/CAD is the best of the CAD trades.


NZD/CAD


NZD/CAD lacks any ability to long term trades. The lineup as follows: 0.8690, 0.8740, 0.8794, and 0.8866. Current NZD/CAD trades on the verge of 0.8740 at a do or die inflection point. Above 0.8740 targets 0.8790, below 0.8740 targets 0.8702.

Instead of long term target trades, range trades are the order of the day.

Brian Twomey

Long Term Targets: USD/JPY and JPY Cross Pairs

Long term targets are defined as 500, 7 and 1000 ish pip trades. To quote my friend No Brainer trades. Last JPY cross pair target trades were completed in April/ May for 2000 ish pips and posted with updates at fxstreet. In April, JPY cross pairs traveled lower with DXY when DXY achieved 93.00 highs and just prior to the 5 year average at 95.00’s.


JPY cross pairs today settled into 200 pip ranges or 100 pips on either side of vital MA’s. GBP/JPY is included as a JPY cross pair when correlations align to USD/JPY. In the past 3 weeks, GBP/JPY correlates to GBP/USD and excluded from JPY consideration.


The 2 main drivers to JPY cross pairs are USD/JPY and oddly CHF/JPY as both target much lower prices at USD/JPY 110.18 and 116.87 for CHF/JPY. For CHF/JPY contains vital lines at 122.47 and 117.90 and must break to target 116.00’s. Both USD/JPY and CHF/JPY are severely overbought.


CHF/JPY is a USD pair as it Correlates to USD/JPY at +99%, USD/CAD +84%, USD/CHF at +86% and negatively correlates to GBP/CHF at -91%.


USD/JPY main line break to target 110.00’s is located at 112.85. As 112.85 rises then longer term averages become more overbought which means USD/JPY’s fall will hit much harder and faster. Extreme prices for USD/JPY are located at 115.00’s and middle 114.00’s.


CHF/JPY extremes begin at 125.00’s. Both USD/JPY and CHF/JPY contain short only strategies and matches EUR/USD long only.


Part explanation to JPY cross pair 200 pip ranges is due to USD/JPY’s loss of correlations to EUR/JPY at -83%, AUD/JPY -51%, NZD/JPY -30% and +28% to CAD/JPY. Only current trades available to JPY cross pairs are daily and weekly.


EUR/JPY is supported below at 127.36, 127.04 and 126.33 Vs 129.21 and 129.32 above. A break at 129.32 begins a short only strategy.


CAD/JPY is supported at 86.17, 85.80 and 85.00’s across the board. Any price above 88.51 begins a short only strategy.


AUD/JPY is supported below at 79.87 and 80.91 Vs 81.90 and 82.51.
NZD/JPY is well supported below at 75.93, 75.54, 75.47 and 75.20. Any price above 76.88 begins a short only strategy.


Best trades are EUR/JPY and AUD/JPY as both retain high places to weekly rankings for each of the past 2 weeks.

Brian Twomey

FX Weekly: EUR/USD, GBP/USD, JPY, AUD, NZD

EUR/USD from last week’s analysis had to break 1.1268 to continue the downtrend from its neutral position at 1.1300’s. EUR/USD broke l 1.1268 Wednesday and traded to 1.1223. Next lower points are located at 1.1226, 1.1189, 1.1180 and 1.1133.


EUR/USD’s target from the 5 year 1.1505 average is now located at 1.1041 and a rising target along with a rising average. EUR/USD’s problem to the downtrend target is not only the 5 year average rise but longer dated averages are deeply oversold and ascending.


While the 5 year average targets 1.1041, longer dated averages at 1.1500’s, 1.1700’s and 1.2000’s target middle to upper 1.1400’s. EUR then adopts a long only strategy as a lower EUR/USD is in contention against its own averages.


USD/JPY


Last week’s trade offered as long to target at 113.97 and 114.11 then short to target 114.40. Highs achieved 114.23 and lows to 113.17 for a round trip trade at +159 pips. USD/JPY longs target this week 114.25 and 114.32 then short to target 113.41. A break at 112.85 target 112.29


USD/JPY weekly averages are rising yet the ascent is extraordinarily slow as noted by long targets offered over each of the past 6 weeks. Despite rising weekly averages, USD/JPY is astronomically overbought from 108.00’s and 109.00’s and targets 109.00’s on a longer term basis.


Trade Rankings


Trade rankings for the week distinguished by easy trades and profit pips as follows: EUR/USD, EUR/JPY, AUD/JPY, AUD/USD, EUR/AUD, USD/CAD, CAD/JPY, CAD/CHF, NZD/JPY, NZD/USD, AUD/CHF, NZD/CHF, EUR/NZD.


JPY Cross Pairs


JPY cross pairs earns high rankings due to not only oversold but all sit just above vital long term averages. EUR/JPY for example from 127.00’s is protected at 126.11 and 125.00’s, AUD/JPY 80.12 and CAD/JPY at 86.00’s.


NZD


NZD/USD and cross pairs move higher on the weekly ranking due to oversold NZD/USD and NZD cross pairs. NZD/USD’s brig break to resume the downtrend from neutral had to break 0.6675 and NZD achieved 0.6701 lows. NZD/USD driving prices are located at 0.6843 and 0.6902. Above targets 0.7000’s to 0.7200’s.


GBP


GBP trade rankings as follows: GBP/USD, GBP/JPY, GBP/CHF, GBP/NZD, GBP/AUD, GBP/CAD.


GBP/USD


Last week’s GBP/USD levels : 5 year average and rising line is located at 1.3109 then 1.3361, 1.3448 and 1.3485. At 1.3361


Current weekly vital levels are located at 1.3111 and 1.3156 Vs 1.3357, 1.3445 and 1.3464 .GBP/USD trades 201 pips from 1.3357 to 1.3156 and down from 252 pips last week.


GBP/USD lower averages are rising vs a drop to higher averages. A showdown is on the way.


GBP/JPY correlates to GBP/USD this week at 85%, last week at 81% and 2 weeks ago at 60%. GBP/JPY is solidly in the GBP/USD universe. Overall GBP/USD and GBP/JPY are oversold and no changes to GBP/JPY levels from last week at bottom 148.10 then 150.37, 150.67, 151.03, 151.25 and 151.92.


USD/CAD begins the week severely overbought while USD/CHF must break 0.9213 to travel lower and oversold USD/JPY 112.85.


DXY remains stuck between 95.25 to 97.16 then 97.62, 98.14, 98.47 and 98.62.
Overall currency market price ranges are severely compressed and further compressing.

Brian Twomey

GBPUSD, GBP/JPY, EUR/USD

The Boe Watch took informed probabilities were correct yet the BOE raised against probable expectations. Last BOE meeting probabilities were correct yet BOE failed to raise against probability expectations. RBNZ probabilities at 44% informed the RBNZ won’t raise. The RBNZ raised. Probabilities are failures.


What works is the 5 day Rule and 90 day interest rate. A 5 point movement or more in 5 days then raise or lower expectation are high to guaranteed. No 5 point move then no interest rate change as interest rate traders are the smartest and most correct among us as they trade inside tiny intervals.


The BOE raise to 25 places Sonia 6 points below at 0.19 and inside a large range from 0.1466 to 0.3337 and the 5 year average at 0.3543. What 25 and 19 does for GBP is nothing and no change. Levels are different but the same old story remains due to the 6 point creation by the BOE from Libor elimination.


BOE 25 now aligns to the FED at 25, SNB at 25, BOC at 25, ECB from 0.42 to 0.50. The RBNZ is high at 75 and RBA low at 10. The RBA should raise next to the vicinity of 25 to match central bank counterparts. BOJ at 0.90 is the wildcard in the mix to lower or remain at 0.90. The BOJ Call rate is the only central bank with an active interest rate market.


To delve further, the Japanese Euroyen Tibor rate is the offshore rate since 1986 and currently trades all December from 0.0310 to 0.1610 or 13 points. Euroyen Tibor is applied particularly for overseas repatriations to Japan. Once the premiere rate for EUR/JPY trading but was eliminated years ago due to the vast 13 point range.


USD/JPY Weekly Trade


USD/JPY long target achieved 113.97 and 114.11. Highs traded to 114.23. Shorts to target 113.40 achieved lows at 113.44.


Long +80 ish pips and shorts +79 PIPS or total +159 pips. USD/JPY’s weekly range 104 pips. The weekly trade profit was 1.5 times the weekly range.


GBP
What separates GBP from counterpart currencies is ability to leave ranges. From GBP/USD 1.3315, GBP/USD traded to 1.3375 or 60 pips. The 60 pips is right at range high ability and matches all past years.


Since BOE informed rate rise from the 7 to 8 am EST hour, a free money trade existed to target 1.3315. By the 9 am hour and ECB time, GBP/USD traded to 1.3327 or 47 pips. GBP/USD eventually achieved lows at 1.3303.


Last week’s GBP/USD levels : 5 year average and rising line is located at 1.3109 then 1.3361, 1.3448 and 1.3485. At 1.3361 was the downside level for shorts.


Next week vital levels are located at 1.3111 and 1.3156 Vs 1.3357, 1.3445 and 1.3464 .

GBP/USD lower averages are rising vs a drop to higher averages. A showdown is on the way. A close price in the 1.3260 vicinity then long GBP/USD next week.


GBP/JPY


GBP/JPY correlates to GBP/USD currently at 85%, last week at 81% and 2 weeks ago at 60%. GBP/JPY is solidly in the GBP/USD universe.


The bottom price is found at 148.10 then 150.35, 150.67 Vs above at 151.03, 151.25, 151.65, 151.84 and 151.90. No changes since last week. A close today at 150.80 ish then long for next week.


EUR/USD


EUR/USD downtrend begins on a break at 1.1272. EUR long and short averages are rising as the new downside target is now 1.1040. EUR/USD driving averages are located at 1.1471, 1.1504 and deeply oversold 1.1584. EUR/USD targets 1.1430 then 1.1454 and long only strategies.


Despite the 1.1040 target, no confidence exists to target completion. Longs will pay far more than shorts.


EUR/USD 5 vital numbers today: 1.1289, 1.1306, 1.1314 Vs 1.1376 and 1.1405. Long at lows and short at tops for multiple profit pips.

Brian Twomey

GBP/USD, GBP/JPY, GBP/NZD

Nasdaq achieved target at 15088 from 15600’s for +600 ish Points. Lows traded to 15049 for an extra 39 points. Now at 15500.00 and short only strategy remains.


FTSE traded to lows at 7166 from 7311 and targets 7132. Trade runs +145 points. Short only strategy also remains however FTSE is a horrible index and S&P’s are much better as both move daily for the same point movements.


S&P’s lows from 4700’s achieves 4606.33. Trade runs + 94 points. Short only strategy as miles of downside remains to 3800;s. Targets are located at 4497.09. then 4268.80, 4032.75, 3859.03.


USD/JPY weekly trade as written Sunday, USD?JPY targets 113.97 and 114.11 then shorts to target 113.40. Highs achieved 114.23.


Gold as written contained massive resistance at 1793 and 1805 and held. .Targets 1768.86, 1745.66, 1730.20. Gold traded to weekly lows at 1753 between 1768 and 1745.

Gold actually traded 40 points from 1793 and failed to achieve 1/2 its 119 point range at 59 points. Gold is not worth the effort as better trades exist.


Overall, 19 currency pairs achieved targets this week. The weekly target routine hasn’t changed since 2012 as seen from years of prior posts.


Powell and the Fed offered 35 ish pips upon taper release. Only 35 pips and not usual 50 pips. Fed Funds as Powell stated will remain at 0.09 for the remainder of 2022. Fed funds traded 0.08 everyday for the past 2 and 3 months and no changes.


GBP/USD


GBP today targets 1.3315 upon a break at 1.3281, 1.3294 and 1.3306, Then short from 1.3315 to target 1.3256. Break 1.3248 targets 1.3197 and 1.3183. Then long to target 1.3218.


GBP/JPY bottom price as written Sunday held at 148.09 and GBP/JPY bounced fro 149.76 to highs at current 151.74. Longer term GBP/JPY broke above vital 151.26. Next hurdle is located at 151.96.


GBP/JPY short entries today are found at 151.83, 151.92 and 152.02 to target 151.35. Then short break 151.26 to target 150.51 upon break at 150.69.


GBP/NZD short just ahead of 1.9598 and targets 1.9499.

Brian Twomey

Sonia, BOE Watch, GBP/USD

As GBP Libor ends for this month of December, Sonia and Ronia are the only transition interest rates and Sonia as most vital. As the Sonia panel from the BOE discussed, the reason for such a huge GBP jump last month was due to the vast majority of GBP liquidity attached to short term instruments.

Liquidity defined by OIS. OIS is factored from average money and number of Sonia and Ronia transactions Vs the rate at each transaction

With the false hype of BOE raise, nobody valued a raise or no raise decision but decided to avoid risk. Once the decision was reached, a massive readjustment occurred to GBP and all financial instruments.


Note from yesterday Sonia’s 6 point spread to headline. All GBP trading in exchange rates derivatives, yields and the whole GBP market complex is traded within Sonia’s 6 points. The FED , Fed Funds and all central bank overnight rates applies to the same tiny moves. This is the new Risk free interest rate concept upon Libor elimination.


The 6 points are defined and traded within small percentiles to highs and lows and to hold the 6 point boundary. For Fed Funds to equal Sonia’s 6 points then Fed Funds trades 3 points per day and right at 3 ish points for Eonia and the ECB’s Euronia Repurchase Agreement Rate index.


Traded within the 6 points per year are 30 trillion GBP to Sonia Futures, Swaps, derivatives of all sorts to include Floating Rate Notes.


DXY from Fed Funds 3 points yesterday traded 10 pips, 48 pips Monday and 38 points Friday. GBP/USD due to 6 points traded yesterday 48 pips, Monday 64 pips and 60 pips Friday. As GBP Libor eliminates completely and Sonia trading is more perfected, GBP/USD daily and weekly ranges will substantially drop. This includes all currencies, all financial instruments and all central banks.


I applied GBP/USD for example to the new 6 point arrangement and what’s coming is today’s ranges drop to just at 1/2. GBP/USD at 60 ish pips per day already dropped by 1/2 and will drop another 1/2 very soon.


The rude awakening will come to those trading by charts, indicators and Fibs as a severe adjustment is required to strategies. View NZD/USD and the RBNZ 50 point raise. NZD/USD traded 100 pips.


The same principle exists today as in January 1972 when the free float by interest rates began. A currency or financial instrument moves and trades by an interest rate. No movement by an interest rate then no movement to currencies and financial instruments.


The difference today from 1972 is central banks killed off interest rate market movements so in turn killed off traded markets. All market price action moved and will move to banks to trade buy/ sell and lend/ borrow rates, repurchase agreements and derivatives within tiny 6 and 3 point channels.


For interested, the BOE contains every month all Sonia information, market notices, charts and graphs. Once, they published vital numbers but moved today to charts. WMBA Limited contains all Ronia information, charts and graphs. Secondly, despite changes ahead, Brian Twomey is well prepared.


Sonia.


Sonia’s average move from 1 year to 5 year monthly averages is 22 points. A 25 point rise maxes the average.


From 0.0457 and today’s 0.0468, Sonia trades below 0.0493 then 0.1466 and 0.3337. A BOE rate rise to 0.20 places Sonia targets to clear 0.0483, 0.0493, 0.0731, 0.0808 and 0.0888. Sonia then trades from 0.0493 to 0.1466 at 0.14 and bumps against the average at 0.1466.


Sonia’s average move per month however is barely 10 points. Assisted to the rate rise scenario is 0.0493 is severely oversold but the target is 0.0483 or 0.0015 points or 15 thousands.


Sonia oversold begins at the 4 and 5 year monthly averages to the 10 year monthly average. Any Sonia drops factors to more oversold from 4 to 10 year monthly averages. The 5 year average is located at 0.3543 and 10 year at 0.3935.


An interest rate rise is on the way and a higher GBP/USD but the question is when and how far. The mid point from the 5 year to 0.0493 is located at 0.20 and places headline at 0.25. The mid point from the 1 to 10 year average is found at 0.2214 and headline at 0.27.


The BOE Watch tool reports today 100% no change Vs 52.5% yesterday and 37.5% 1 week ago.


How good is BOE Watch. I have 38% but a step further as Odds at 48% raise Vs 51% against from 0.046 to 0.049. The BOE Watch tool is accurate.


GBP/USD for the week traded 90 pips and within 2 vital points at the 5 year average at 1.3109 to 1.3361.


For today, GBP/USD shorts at 1,3304 and 1.3296 to target 1.3245. Then short 1.3238 to target 1.3186. Long 1.3186 to target 1.3205. Longs and shorts are traded to maximize profit pips.

Brian Twomey

Sonia Vs Ronia, CME’s BOE Watch Tool

On this day according to the CME’s BOE Watch tool, 100% probability existed to no interest rate changes. Yesterday December 13 existed a 50% probability existed to raise Vs 50% to no change. On December 7 or 1 week ago, a 30% probability existed to no change and 70% chance to raise. On November 12 or 1 month ago, a 100 probability existed to a rate hike.


Sonia closed at 0.0468 from 0.0505 1 month ago Vs BOE’s headline rate at 0.10 and offers a 6 point range. Factor Ronia or the new Repo rate index as the fun rate to Sonia and created in 2011 against a new Volume Weighted Average methodology to calculate the index in 2018 then the Sonia Vs Ronia range becomes about a 1 point difference.


Ronia’s quarterly statistics for example and the last available data, here’s the VWAP rates. July 2020 Average 0.0834 vs highs 0.1335 and lows -0.0230 or 5 and 6 point difference. August 2020 VWAP average 0.0729 Vs highs 0.1180 and lows 0.0107 or 4 points and 6 point difference. September 2020 VWAP average 0.0757 Vs highs 0.1150 and lows 0.0248 or 3 and 5 point difference.


The Ronia rate is then compounded daily and released by the BOE. Monday’s Compound index then appears as 101.36993867, Friday as 101.36956291 a difference of 37576.00.


GBP/USD from 2018 to 2021 ranged 2300 pips from 1.1900 to 1.4200’s and 3900 pips from 2015 to 2018 as 1.5900’s to 1.1900’s.


Repo rates in the BOE interest rate system were once available as individual rates to cover 1 week to 1 year. The Ronia Index folded individual rates into an index.


Since Sonia is the big rate with available data, Sonia becomes the overall factor to oversold or overbought interest rates and GBP direction. Compound rates are daily rates since 2018 and not available as monthly averages while Ronia rates require a payment.


As mentioned before, never ever pay market people one nickel as many other ways exist to factor accurately GBP by interest rates. Like Currency analyst webinars, they should pay us to listen.


FTSE


As written 7311 short point and targets are found at 7162.79 and 7123.19. Lows achieved yesterday 7226 for +85 points.


S&P’s and NASDAQ


From 4700’s , lows achieved 4669.15 and +30 pips. Long way to short targets. NASDAQ achieved 15,4000’s for +200 points and long way to short targets.


EUR/AUD broke 1.5810 and traded to 1.5893 highs. Short only is the strategy around 1.5910 vs long AUD/USD.


EUR/USD now 6 attempts to break 1.1260’s since Friday and all failed. EUR/USD traded today to 1.1265 and bounced again 50 pips to 1.1315. EUR/USD becomes oversold at 1.1278 and 1.1268. Long drops is the only strategy.


GBP/USD highs today are located at 1.3279 on a break of 1.3245.

Brian Twomey

BOE Watch Tool

MPC Futures
MPCX1MPCZ1MPCG2MPCH2MPCK2MPCM2MPCQ2MPCU2MPCX2
99.79899.90599.72399.65099.47599.34399.17399.14899.045
Meeting Probabilities
Meeting Date0.100.200.300.400.500.600.700.800.901.001.101.201.301.401.501.601.70
12/16/2021100.0 %0.0 %0.0 %
2/3/20220.0 %17.5 %82.5 %0.0 %0.0 %
3/17/20220.0 %4.8 %35.4 %59.8 %0.0 %0.0 %0.0 %
5/5/20220.0 %0.0 %1.2 %12.5 %41.5 %44.9 %0.0 %0.0 %0.0 %
6/16/20220.0 %0.0 %0.0 %0.8 %8.8 %32.0 %43.8 %14.6 %0.0 %0.0 %0.0 %
8/4/20220.0 %0.0 %0.0 %0.0 %0.2 %3.2 %15.8 %35.6 %35.0 %10.2 %0.0 %0.0 %0.0 %
9/15/20220.0 %0.0 %0.0 %0.0 %0.2 %2.5 %12.6 %30.6 %35.1 %16.4 %2.6 %0.0 %0.0 %0.0 %0.0 %
11/3/20220.0 %0.0 %0.0 %0.0 %0.0 %0.2 %2.4 %12.4 %30.2 %35.0 %16.9 %2.9 %0.1 %0.0 %0.0 %0.0 %0.0 %

Brian Twomey

BOE Probabilities CME BOE Watch

Target RateProbability(%)
Now *1 Day (12/13/2021)1 Week (12/7/2021)1 Month (11/12/2021)
Ease0.0 %0.0 %0.0 %0.0 %
NoChange100.0 %50.0 %30.0 %0.0 %
Hike0.0 %50.0 %70.0 %100.0 %
* Data as of 12/14/2021 2:23 AM CT

February

CME Bank of England Watch Tool

Meeting InformationMeeting DateContractExpiresMid PricePrior VolumePrior OI3 Feb 2022MPCZ13 Feb 202299.9050139ProbabilitiesEaseNo ChangeHike0.0 %0.0 %100.0 %
Target RateProbability(%)
Now *1 Day (12/13/2021)1 Week (12/7/2021)1 Month (11/12/2021)
Ease0.0 %0.0 %0.0 %NaN
NoChange0.0 %0.0 %0.0 %NaN
Hike100.0 %

February

This image has an empty alt attribute; its file name is QPWUCBWCC_000045.png
Target RateProbability(%)
Now *1 Day (12/13/2021)1 Week (12/7/2021)1 Month (11/12/2021)
Ease0.0 %0.0 %0.0 %NaN
NoChange0.0 %0.0 %0.0 %NaN
Hike100.0 %

Brian Twomey

Gold and FTSE 100

The Gold price is not only overbought but sits at a critical juncture. From the open at 1783.20, next above is located 1793.72 and 1805.10.

Targets above 1805.10 and excellent short entries are found at 1818.48, 1864.53, 1874.58 and 1912.09.


Below 1.1793.72 targets 1768.86, 1745.66, 1730.20 and 1696.42.

Gold’s overall range is found from 1793.72 to 1674.31 or 119 points then 1594.72. The 5 year average is positioned at 1542.31.


Recall the August 2021 Gold post as the 5 year average was then 1510.03. The 5 year average rose 32 points in 4 months. The April 2021 post, Gold ranged from 1846.05 to 1693.27 or 152 pips as opposed to 199 points today.


Overbought begins at the 5 to 10 year monthly averages. From the 5 to 10 year averages, 1500’s and 1400’s are many and strong supports.


A viable trade for many many points is non existent. Day trade ranges roam from 9 to 12 and 18 points on a good day. No changes over many months of day trades. Gold is a dead traded instrument.


FTSE 100


From the open at 7291, FTSE monthly averages are non uniform and located all over the map.


The 5 year average is located at 7018.20 then many and massive supports exist from 6800’s to 6900’s.


The next short targets are found at 7162.79 and 7123.19.


Short entries are best found at 7311.88, 7350.79, 7364.77 and 7416.47 then range tops at 7524.09 and 7563.02.

Not much happening with FTSE

Brian Twomey

FX Weekly: EUR, GBP, CAD, JPY, AUD

Covid 19 is a variant from Sars (2002) and Mers (2012), known as coronaviruses and produced from the Wuhan Lab in China although Mers was originally found in Saudi Arabia. The commonality is all are respiratory diseases.


The original Covid 19 virus mutated as all viruses to form Delta then Omicron. The positive is once Covid mutated to Delta then the first signs and warnings existed to Covid’s death as a virus. The next mutation to Omicron informs the virus is finished and will soon die however more mutated variants may exist from Omicron but far less as a menace to worldwide societies.


EUR/USD again at 1.1300’s is a neutral price in relation to the rising 5 year average now at 1.1502. The figure 1.1502 is derived from the 2020 to 2021 move from March 2020 at 1.0637 to January 1 at 1.2346. The 5 year average at 1.1502 happens to coincide to the past move.


EUR/USD to continue the downtrend and break from neutrality must cross below 1.1268 then 1.1221. On Friday, EUR/USD failed on 4 attempts to break 1.1260’s then bounced back to its neutral position at 1.1300’s.


GBP/USD highlights the currency market story this week as most currency pairs are locked between solid average points. GBP/USD’s 5 year average and rising line is located at 1.3109 then 1.3361, 1.3448 and 1.3485. At 1.3485 is oversold and forces the 5 year average at 1.3109 higher. A 252 trade range for the week allows GBP/USD to earn number 1 spot to overall GBP rankings.


The wildcard is GBP/JPY as it sits between the 10 and 15 year averages from 150.31 to 150.78. GBP/JPY averages are dropping and the bottom price for the week is located at 148.09. GBP/JPY must break 151.26 then 151.96 in order to target much higher prices to 155.00’s and top of the range at 157.00’s.


Current GBP/JPY is oversold from higher averages and Correlates to GBP/USD this week at +81% and up from +60% last week.


NZD/USD from 0.6700’s also sits at neutral from its 5 year average at 0.6843. NZD/USD’s downtrend to begin must break 0.6673 and a 0.6500 target. .Above 0.6843 targets next 0.6928 then 0.7247. The target at 0.6504 is currently 200 pips from current 0.6700’s. NZD/USD has been a dead issue over past weeks and contained between vital averages.


NZD/USD neutrality forced EUR/NZD and GBP/NZD into a comfortable trade range between EUR/NZD 1.6415, 1.6578 and 1.6832. Current EUR/NZD sits between 1.6578 and 1.6832 while GBP/NZD is locked from 1.9179, 1.9463 and 1.9599.


The pairs to watch over this and upcoming weeks is AUD/USD, EUR/AUD and GBP/AUD. Despite AUD/USD’s neutrality, 0.7101 must break to move AUD lower. AUD/USD achieved target at 0.6900’s from 0.7300’s and is now in an uptrend. AUD/USD dropped 400 pips from 0.7300 and rose 200 pips to 0.7100’s.


EUR/AUD’s 2 major lines moving lower are 1.5810 and 1.5773. EUR/AUD trades below. Deeply oversold GBP/AUD higher forces AUD/USD lower however on a long only strategy. to target lower 0.7200’s.


USD/CHF and USD/JPY begin the week oversold and the deciding factors are 0.9210 and USD/JPY 112.70 while USD/CAD as this week’s odd ball currency in the trifecta, begins the week overbought.


USD/CAD is stable inside 400 pip ranges from 1.2204 to 1.2612 and 1.2612 to 1.3036 and no changes over past weeks. GBP/USD 1.3109 and USD/CAD 1.3026 as defining points to overall currency markets are expected to hold this week.


USD/JPY is the best trade due to wide ranges and targets easily 113.97 and 114.11 then shorts target 113.40. USD/JPY weekly trades offered over the past 4 and 5 weeks are the exact same trades as entries around 114.00’s and targets at 113.31. No different this week to locked ranges.


DXY opens the week at 96.05 and a break at 95.52 changes USD to shorts. DXY ranges at 164 pips are located from 95.52 to 97.16


The 10 year yield begins the week at 1.482 and broke the range as posted October 31 at 1.4941 to 1.5182 yet held the larger range from 1.2290 to 1.6146. Since Oct 11 when the 10 year traded to 1.6146, the 10 year dropped 12 points and 36 points from 1.7050 over the past 3 months.


Overall Currency markets begin the week fairly average yet stable within ranges as no big breaks are expected.

Brian Twomey

USD/JPY and Fed Funds Long Term Averages

USD/JPY weekly trade as posted Tuesday: Short 114.22 and 114.37 to target 113.46 then 113.31


Highs 113.94, lows 113.26 and +57 Pips.


Sad sad week for USD/JPY. Note the past 4 weeks to posted USD/JPY trades. Targets were the exact same in the 113.31 vicinity. Only difference was entries. The best was 2 weeks ago when USD/JPY missed entry by 95 pips to 115.00’s as the opportunity existed to demonstrate the repair trade and profit from many extra pips.


Rare day to miss entry so far away. 20 and 30 ish pips maybe but never 95. Then comes trade target to target. USD/JPY achieved target at 113.31. The course of action is immediately trade long at 113.31 for more extra pips. USD/JPY from 113.26 traded to 113.60.


Never get greedy on the quick reverse because with Brian Twomey trades, traders will earn many many pips. Strategy is grab extra profit pips and exit.


USD/JPY on 4 trades this month profited 500 ish pips. The past 2 monthly candles ranged from 115.52 to 112.60 for 292 pips. The 500 pips profit derived from a range of 292 pips. Only USD/JPY trades were short.


If we traded long to target then reversed, profits were much higher. Profits were earned by trading 2 times the range. Only 1 trade required add 1 lot.


Weekly trades for the past 4 weeks included day trades for extra profit pips. Last note, nothing changed since the 2012 target trades except to adjust the trade methodology to trade easier by simpler calculations, to trade more profitably and never use charts, indicators or stops. A trade still begins at entry and ends at target. The word target to trading proliferated among traders.


FED Funds


Fed Funds long term averages were last posted in August 2016 and March 2017. The market question in 2017 was the Neutral rate of interest. Knut Wicksell from Sweden and the Stockholm School of Economics in the 1890’s offered the Neutral rate of interest in the must read book Interest and Prices.


Wicksell suggested then to subtract the long term interest rate from Inflation to determine if an economy was over or underperforming and where was a determination to the proper level of the interest rate.


The Neutral rate of interest in August 2016 from the 20 year monthly average was 1.64 and 1.07 in March 2017. Today’s Neutral rate from the 20 year monthly average is negative 4.919, from the 25 year monthly average at negative 4.1424 and 30 year monthly average at negative 3.7595. If Inflation was lower then the Neutral would record higher.


GDP last reported +2.1% and 1.9% for Q4 2016 and around 2.3% in 2017. Beside a few good quarters from 2016, GDP hasn’t changed. GDP in 2016 and in billions began at 18,425.30 and rose today to 23,187.04. The economy in 5 years added 4761.74 billion. Our political and economic leaders failed the United States miserably.


The Fed’s course of action long ago was raise and today, the Fed must raise to not only drop Inflation but to prevent an economic depression. A severe United States downturn would add contagion affects to many world economies from zero growth.


In March 2017, the Fed raised to 0.66 and 0.66 was located from the 10 to 12 year monthly averages from 0.69 to 1.32. Today’s 10 to 12 year monthly averages are located at 0.6315 to 0.5493.

The 15 year in 2017 was 1.34 Vs today at 0.9132.


Normality for market prices and interest rates is trade within 1 to 10 year monthly averages. Fed Funds at 0.66 was not only overbought but raise at the 10 to 12 year average was an insane mistake from overbought averages and the Neutral Rate.


WTI for example written months ago traded at 70’s and 80’s at the 23 year monthly average. Not only was the WTI price high from averages alone and longs impossible but downside shorts gained more downside speed than upside prices.


Fed Funds monthly averages from 1 to 9 years in 2017 ranged from 0.16 to 0.41 while today’s 1 to 9 year is located from 0.0816 to 0.6862 however the 4 and 5 year monthly averages are located at 1.1122 and 1.0901. From 1.1122 minus 0.08 then equates to 1.0306 and 1.0085 from 1.0901.


Medians from 1 to 9 years traded in 2017 from 0.12 to 0.39 and today 0.08 to 1.46. Overbought at 0.66 in 2017 included overbought to averages and Medians.


A Median average is the same principle as the Fed speak to central tendency. Central tendency in Fed Statements is the same as a Median Average. Fed Dot plots are 5 year Median averages and an insult to good intelligence as simple averages reveal a far different story.


The 10 year average in 2017 was 1.02 and today 0.6315. Averages from 12 to 25 years in 2017 ranged from 1.32 to 2.67. Today, from 0.51 to 2.0774.


The 20 year average in 2016 was 2.44 and 2.24 in 2017. Today’s 20 year average is located at 1.301.


Overbought targets in 2017 were 0.71 and 0.26. Fed Funds dropped to 0.08.


Fed Funds today trades from a normalized 1 to 3 year monthly averages at 0.0816 to 1.1122 at the 4 year and 1.09 at the 5 year. Fed Funds position is correct and perfect for a raise especially when Fed funds is not oversold. Fed Funds oversold begins at the 26 year monthly average to the 30 year.


Targets for averages 26 to 30 year are located at 0.0275, 0.0948, 0.17, 0.2274 and 0.2908. Targets reveal Fed Raises once from 25 to 50.


A 25 point raise to 0.50 places Fed Funds averages from 0.2291 to 1.0901 and 1.1122.

Fed funds would trade daily from 0.08 +12 to 0.20. Raise to 0.75 places Fed Funds within the same averages and Fed Funds daily trading then trades at 0.32.


Overall difference to Fed Funds averages in 5 and 6 years from 2016 and 2017 is all averages severely dropped and due from non movements. Without a raise, Fed Funds averages will continue to drop. Markets remain dead and done to raise or no raise.


The 10 year minus 2 = 0.4024 while 10 minus 5 is negative 0.4586. The 20 minus 10 = 0.6695.

Brian Twomey

Next Week’s Trade Lineup

Currency markets end the week at neutrality and next week begins the same old neutral story. EUR/USD upon the break at 1.1490 traded 200 pips to middle 1.1200’s. EUR/USD target today is located at 1.1033 and 2 points higher than yesterday.


EUR/USD downtrend must break 1.1267 then 1.1220 in order for the target at 1.1033 to be considered. The banks target at 1.0800’s is today a fantasy. Chances are good this target derived from a minor bank. Minor banks today are no different today than the currency analysts and trade services.


The target at 1.1033 normalizes EUR/USD price to the downside. EUR/USD at 1.0800’s says EUR/USD will move to deep oversold.


The driver to EUR/USD is longer term averages are rising and trade deep oversold. As long as averages rise then the target rises along with the averages.


EUR/USD price contains 2 positives to shorts. December and January are most important for traditional EUR seasonal down trends. Same principle held for USD/DEM as the German Deutsche Mark.


Next is severely overbought stock markets. Both EUR/USD and stock markets are risk assets and trade alongside each other. Stock market downside corrections would take EUR lower.


if EUR/USD breaks above current 1.1501 then forget downside targets and shorts as the new target becomes 1.1700’s and higher. EUR/USD is currently trapped from 1.1267 to 1.1501 and trades dead center at 1.1300’s.


Question to 100,000 troops at the Ukraine border and a shot fired. Russia by no other choice must take the Black Sea in the Crimea in order to obtain an export and import route otherwise Russia is landlocked. In day’s of old, a shot or missle firing would send the EUR down 100’s of pips quickly.


GBP/USD is trapped from 1.3108 at the 5 year average to 1.3373 and 1.3420’s. Longer term averages are oversold and rising. Same story as the EUR which says GBP 1.3108 won’t walk through easily. GBP must break 1.3108 or 1.3400’s to get moving again. At 1.3300’s trades dead neutral.


USD/CAD big break for lower is located at 1.2613. Below then next is 1.2200’s at the 10 year average. USD/CAD trades 400 pips from 1.2600’s to 1.2200’s. Above 1.2613 then next is the 5 year average at 1.3037. From 1.2600’s to 1.3037 is 400 pips, USD/CAD trades dead neutral.


NZD/USD break at 0.6846 November 24th at the 5 year average traded 100 pips lower to 0.6743. NZD/USD to continue the downside targets 0.6674 then 0.6640. Above 0.6844 targets easily 0.7013. Above 0.6844 then forget about EUR and GBP downside as NZD represented as bottom side currency price will bring up the rear guard and force GBP and EUR higher.


AUD/USD as this week’s winner traded almost 200 pips from deep oversold at week’s beginning. AUD was the only currency to achieve near target from long term averages at 400 pips. At current 0.7170, AUD enters neutrality. The big line break for AUD/USD is located at 0.7306. Longer term averages are rising and oversold and the same situation as GBP and EUR.


EUR/AUD below 1.5811 and 1.5771 would ensure AUD continues its winning ways higher.


The currency pairs to trade in upcoming weeks are EUR, AUD and USD/JPY. USD/JPY ranges are opening to allow trade far and wide however USD/JPY is overbought from short and long term averages. AUD/JPY and EUR/JPY are preferred pairs to trade.


EUR/GBP sits massive overbought. EUR/GBP is the main pair to hold GBP/USD in tiny neutral ranges. Overall, EUR/GBP is a horrible currency pair and lacks range movements.


GBP/JPY sits in the exact same position at week’s beginning. Above 150.78 would move GBP/JPY back to 151.00’s. GBP/JPY trades between 143.73 to 150.25 and stuck between longer term averages.

Brian Twomey

NASDAQ, USD/JPY, GBP/JPY

By the numbers, American stock market hierarchy is established by Dow Jones, NASDAQ and the S&P’s. Dow Jones was created first in 1882 followed by the S&P’s in the 1940’s and NASDAQ in 1971.

NASDAQ is the middle market index and trades 11,000 points to the S&P’s and 20,032 points to Dow Jones while Dow Jones trades 31,000 points to the S&P’s.


Lowest numbered S&P’s to overbought and oversold is enough to influence prices to Dow Jones and NASDAQ but the same principle as overbought and oversold Dow Jones is enough to bring up or down the rear guard as NASDAQ and S&P’s.


NASDAQ like the S&P’s are massively overbought and most specifically seen from the 4 then 5 year monthly average at 9110.28 and from the 10 to 20 year monthly averages. Break at 9110 targets 8422.67 and averages drift lower from 8422.


The first big break is located at 14169.18 then 12069.08 and 10652.41. Targets are located at 15088.56 then 14461.19, 13465.96, 1324.97, 12660.05 and 12032.06, 1150.29.


Same as the S&P story yesterday, longs are impossible and short only strategy. Prices from the 4, 5 and averages to 20 years trade at extremes.


EUR/USD target is currently 1.1031 and up from 1.1026 as the longer average is rising. Banks are reporting EUR/USD at a 1.0800 target. The actual number is 107.95 but recommended is 1.08 as I reported many weeks ago is an unrecognized target. Don’t push your luck.


GBP/JPY dropped yesterday from 151.13 and before reported 151.18 and 151.28. Current 150.15 to travel higher must break 150.27 and 150.80 then on to 151.00’s again.


USD/JPY achieved 113.78 highs for the week. USD/JPY contains a long way to 114.00’s and can reach middle to low 114.00’s easily.


USD/JPY 5 vital numbers for today 112.96, 113.15, 113.34, 113.81 and 114.09.

Brian Twomey

S&P’s and GBP/JPY Targets

GBP/JPY next vital levels for the weekly view are located at 151.18, 151.28, 151.73 and 151.99. Most important break is 151.28.


Best GBP/JPY analysis is the breakout from longer term averages t 150.25 and 150.88.

GBP/JPY now enters normality on a normal scale to test 152.43 for higher prices.
GBP/USD as correlation to GBP/JPY this week remains much upside to easily 1.3334 and just ahead of big lines t 1.3373 then 1.3457.


GBP/USD as middle currency pair traded 70 pips higher while next middle currency AUD/USD as written traded 96 pips straight up. NZD/USD and EUR/USD as bottom and top currency pairs failed to move.


USD/JPY shorts at 114.22 and 114.37 to target 113.46 then 113.31. USD/JPY this week contains wide range ability and the pair to trade.


JPY cross pairs all traded 150ish pips higher and like GBP/JPY broke out from longer term averages. This is positive for upcoming weekly prices and trades.


USD/CAD remains safe above 1.2614 against a short strategy.


EUR/AUD as written broke below 1.6132 then 1.5950 to 1.5908 from 1.6148.
GBP/NZD must break below 1.9601 on a short strategy as GBP/NZD trades severely overbought.


Future writings; NASDAQ and 20 year monthly averages. Fed Funds rate and 30 year monthly averages, 90 Day Libor and Eurodollars and connection to Fed Funds. NASDAQ is not required 20 year monthly averages nor did today’s S&P’s.


90 day Libor is the offered side to Eurodollars yet Libor ceased to exist as Futures contracts and are no longer offered. Since 2018 , central banks created Risk free interest rates such as SOFR to the FED, STIR to the ECB and Bank Bills to the RBA and RBNZ.


AUD and NZD are not affected by the new interest rate arrangements and remain viable trades in the Future. Not much at the BOE as its hybrid interest rate/ Repo rate system remains however trading dead as dead may trade. Sonia at 0.05 hasn’t moved in months.

RBNZ probabilities: 43% no raise. RBNZ raised. How good are probabilities. Worthless. Probabilities factors as 2 ways for accuracy but for perfection, must run data.


Was OCR oversold or overbought and what may be a target price. Probabilities eliminates because its a number thrown out by lazy traders and today’s incompetent currency analysts. Many factor probabilities from Fed Funds and Eurodollar closing prices and this means probabilities change daily but range all over the board. Trust it at your peril.


S&P’s


The S&P’s are severely overbought from 1 month to 20 year monthly averages. The 5 year monthly average at last reporting was located at 2700’s. The average rose 300 pips in 6 ish months while the S&P’s rampaged higher.


The 10 year is found at 2248.57 then the averages from the 12 year to 20 year are factored from the S&Ps at 1100’s. The 1 year monthly average began its journey from 3700’s and now trades 1000 points higher at 4600’s. Overbought applies to the extremes.


The S&P’s at 4700’s trades at the top of the 1 year range.


Longs are impossible as a healthy correction is on the way. Healthy correction applies to all stock markets as stock markets are all connected as one instrument and much the same as the Currency/ Gold Trades. Gold is one instrument. The names and numbers may change but all are the exact same instruments.


The first big break is located at 4194.58 then 3683.88 and 3415.11.


Targets are located at 4497.09. then 4268.80, 4032.75, 3859.03.


Short entries are located anywhere as 4600’s and 4500’s trade in the stratosphere. The S&P’s at minimum require a 200 point correction yet much more to trade at a normal price.


As DXY and Gold both trade above 5 year averages, its only natural for the S&P’s and stock markets to trade lower. The S&P’s are risk instruments which means as the S&P’s drop, all risk instruments will follow to include currencies. But it also means DXY break at the 5 year average at 95.52 may remain above for quite some time in the future. Gold higher follows DXY.


Suggested is follow the Cash prices rather than Futures.

Yes to trades remain available for interested. brian@btwomey.com

Brian Twomey

Future Markets, Interest Rates, EUR/USD, USD/JPY

USD/JPY’s 5 vital numbers for Friday’s NFP as follows: 112.66, 112.81, 112.92, 113.51 and 113.82


Actual 112.91 to 113.32 or 41 pips. profit was earned on shorts. The trades was accomplished in 2 stages. because the trade was a middle range trade as all NFP releases are turning out to be reality.


EUR/USD 5 vital numbers for Friday’s NFP: 1.1239, 1.1254, 1.1267, 1.1324 and 1.1353
Actual 1.1291 to 1.1332 or 41 pips and the same as USD/JPY. Profit was earned on longs But from middle range and completed in 2 stages.


Together 1.1291 to 1.1332 and 112.91 to 113.32. The exact same only the opposite direction movements for trades at 41 pips.


Middle range is the same concept as saying neutral but a neutral price must travel to a location. The point is location. As seen from day trades, currency market prices entered yet another period of slowdown to price movements.


From known bottoms to tops at the start of every trade, price movements adjusted again to a slower price speed and shorter ranges from pre 2016 as wider ranges and faster price speeds. The slowdown was always coming upon us by central bank design but who knew it would meet to the degree of today’s prices.

NFP miss at 200,000 and 40 pips is the first sign to a problem. A traditional NFP miss by 50,000 to its historic 1939 range would trade far wider ranges than 40 pips.

NZD/USD traded 400 pips last month or 13 ish pips per day. NZD/USD’s big break at 0.6845 offered 105 pips to the downside in 7 days and barely 15 pips per day.


Strategies now require another adjustment and further adjustments until the current 50 year period ends for all trading. Its a matter of time when this all ends. My speculation was next period markets trade by the IMF’s SDR rate. if so, markets are guaranteed to trade 10 point daily ranges as the 1960’s.


Fed funds for the past year closed daily averages from 0.09 to 0.07. Europe’s Eonia to effect EUR/USD began the year at -0.481, began December at -0.489 and traded Friday at -0.490.


The opposite to Eonia is the STIR rate to currently replace Eonia. STIR traded 2 points Friday while Fed Funds traded 6 points as its extreme ranges.


The SOFR rate as the replacement to the 90 day Libor rate connected to Eurodollars trades 9 points to its extreme. Eurodollars so far today traded 99.8000 to 99.7975 yet trading overall 2 point daily ranges. And this includes current December Futures contracts and all contracts for 2022.


The slowdown is by interest rate design as central banks are killing off actively traded markets.
EUR/USD at current 1.1287. For the larger averages, EUR/USD trades a big fat neutral and targets lower 1.1100’s or 1.1700’s and easily.


JPY cross pairs for the larger averages trade another big fat neutral. GBP/JPY is the best of JPY cross pairs particularly at +60 correlation to GBP/USD. NZD/JPY stand clear.
NZD/USD problem over the past month is again a fat neutral.


AUD/USD and AUD cross pairs is the best of the non USD pairs to trade while USD/CAD and USD/JPY are best trades for USD pairs.


EUR/USD 5 vital numbers for today 1.1239, 1.1254, 1.1267, 1.1311 and 1.1353.


USD/JPY 5 vital numbers today 112.45, 112.59, 112.73, 113.31 and 113.59.


A EUR/USD Vs USD/JPY breakout would trade EUR/USD to 1.1100’s and USD/JPY to 114.00’s. Then comes long and short reversals.

Brian Twomey

FX Weekly: 5, 10, 15 Year Averages, EUR, JPY, AUD

The vast majority of currency prices since November are trading within the context of most vital 5, 10 nd 15 year averages. EUR/USD as a leader currency broke first November 10 from 1.1490 at the 5 year average then DXY followed 6 days later November 16 by breaking 95.52 at the 5 year. EUR/USD as a leader currency contained a 6 day lead time to DXY.


EUR/USD Vs DXY Lead and Lag Currencies


DXY then contained a 6 day lag time to USD cross pairs such as GBP/NZD, EUR/NZD, CHF cross pairs and CAD cross pairs. While DXY broke above 95.52, EUR/NZD traded 1.6100’s and GBP/NZD 1.8900’s. Both EUR/NZD and GBP/NZD at 5 year averages of 1.9152 and EUR/NZD 1.6400’s imparted a long way to travel to break higher.


EUR/USD contained much more lead time to many currencies as follower currencies played the game of catch up to EUR/USD by trading above or below the larger averages. But this was also a warning to what’s ahead for all currency prices by the EUR/USD and DXY break as all currencies had to align to the new larger average arrangements.


5, 10 and 15 Year Averages


Due to trade at 5, 10 and 15 year averages, opportunity is here as much as danger. While November was the time and opportunity to re position prices to align to larger averages, December represents the time for deep caution as currency prices are now contained and traded within 5, 10 and 15 year averages.


Why 5, 10 and 15 is because most currencies trade within the larger average framework and because of the lead lag concept to all 28 currency pairs. EUR/GBP, CHF/JPY and CAD/CHF for example are laggard currencies to EUR/USD and even DXY. EUR/USD at the 5 year average is compatible to EUR/GBP at the 10 and 15 year average.


Most affected by the new larger average framework is cross pairs. Unaffected so far are the currency market’s defining currency pairs as GBP/USD VS USD/CAD. GBP/USD 1.3107 and USD/CAD 1.3038 are most vital points. Unaffected as well by the EUR/USD and DXY breaks. if either currency breaks then a completely different circumstance exists to currency markets.


GBP/JPY Correlations


As danger, GBP/JPY as lead currency to JPY cross pairs lost correlations last week to either GBP/USD and USD/JPY. From a leader currency, this is rare days especially from GBP/JPY as a highly special currency pair. GBP/JPY this week correctly correlates to GBP/USD +60 and minus 12% to USD/JPY.


Why the correlational change is due from GBP/JPY break at the 15 then 10 year averages at 150.88 and 150.25. As written last week, correlations change at significant levels. GBP/JPY break transferred correlation allegiance from USD/JPY to GBP/USD. GBP/USD is the traditional and rightful owner to GBP/JPY.


AUD/USD and EUR/AUD To the Brink and Targets


To define last week the message to the brink and prices in love with extremes. AUD/USD target from the 5 year at 0.6900 forced EUR/AUD 300 pips higher. To the extreme as AUD/USD dropped significantly on Friday to nearly complete the target at 0.6900’s from 0.7300’s.


When market prices set their sites on target completion, then prices will gun towards that target without regards to any market information or oversold / overbought conditions. The price just doesn’t care nor pay any attention to such trivialities.

EUR/AUD higher was caught in the crossfire and higher was its only choice.


To the 28 currency pairs, its imperative to focus trades on 5, 10 and 15 year averages. This is the present scale. Scale prices by any other means leads to problem trades. Seen by the new scales is a normal market and trading normal prices.


AUD/USD is a good example and this set up is common to most currency pairs to include EUR/AUD. AUD/USD is governed by 0.7307. A major line at 0.7298 crossed below 0.7307. While 0.7298 is deeply oversold to current 0.6993, the line at 0.7307 reaches normality at the 0.6999 target and is not yet oversold. Which is the line to follow for trade purposes.


5, 10 and 15 Year Price Dynamics


What changes the dynamic from focus on 5, 10 and 15 year averages is EUR/USD breaks above current 1.1499 or DXY drops below 95.52. Markets then go into re adjustment mode as we’ve seen in November beginning with EUR/NZD, GBP/NZD,

CAD and CHF cross pairs.


The positive and second option is all cross pairs align to anchor pairs as all above or below larger averages. Prices will then trade uniformly and normally without radical movements such as EUR/AUD and GBP/JPY last week.


AUD/USD as middle currency to EUR/USD and NZD/USD fits the scenario as well as bottom currency NZD. EUR/USD and GBP/USD cross pairs contain problems to EUR/CAD and GBP/CAD and EUR/JPY vs GBP/JPY.


EUR/CAD and GBP/CAD are stuck within larger averages and explains USD/CAD trading in small 200 pip increments while EUR/JPY sits oversold just above vital averages at 126.00’s and 125.00’s .GBP/JPY sits massive oversold below and between longer averages.


AS AUD/USD approaches 0.6999, NZD/USD 0.6500, GBP/USD at 1.3200 lows and EUR/USD at 1.1100’s, suspicion without actual fact is DXY eventually breaks 95.52. USD lower and non USD higher becomes the trade such as higher EUR/USD.


USD/JPY


Problem pair in the mix as usual is USD/JPY. USD/JPY was born a problem pair since WW2 and no changes today. USD/JPY is the preeminent disruptor to currency markets and USD/JPY to JPY cross pairs. USD/JPY is miles above the 5 year at 109.00’s.


USD/JPY sits at 112.76 against most vital break at 112.71 while DXY at 96.15 is 63 pips from 95.52. Miles higher for both or miles lower are only weekly options. DXY challenges next above at 97.16 and easily 114.00’s for USD/JPY or DXY 94.00’s and 93.00’s and 111.00’s for USD/JPY.


Markets at 50 year Inflection Point


Markets enter year 2022 and exactly 50 years since the 1972 free float. From BOE creation in 1694, year 2022 represents year 48 and 2024 at the 50 year mark. Year 2020 was the 12th year in the 4th quadrant of 12 1/2 years broken down from overall 50 years.

Important here is markets end at 50 year marks and a new system of trade develops. Happened every 50 years since 1694. Hurry for profits as I suspect markets trade next as dead as 1960’s currency trading for the new upcoming period.


The Week


USD/CHF and USD/JPY are partners this week at vital 0.9212 and 112.71 while USD/CAD begins the week deeply overbought.


Not much downside room left to AUD/USD however EUR/AUD remains oversold and trades between 1.6132 to 1,6204. Below 1.6132 targets 1.5950. GBP/AUD approaches 1.9158 and 1.9258.


GBP/NZD is the easier trade to EUR/NZD while EUR/USD long as usual represents number 1 ranked currency. GBP/NZD can easily ride the 5, 10 and 15 year wave over next trade weeks as its price is contained from 1.9158 to 1.9601.


EUR/JPY, CAD/JPY and CHF/JPY trade just above 5 year averages while GBP/JPY, AUD/JPY and NZD/JPY trade below yet contained within 10 and 15 year averages.


GBP/USD remains below vital 1.3372 and 1.3457. Both lines are rising. Below prior to vital 1.3107 exists supports at 1.3149 and 1.3117. GBP/USD 1,.3107 is a massive break and GBP won’t walk through easily.


USD/CAD and CAD/JPY remain on the high ranked list as well as AUD/USD Vs EUR/AUD and GBP/AUD.


NZD/USD and cross pairs remain on the back burner and the same positions as the past 2 months.


Overall currency markets require clearance or resolutions to longer term averages to again obtain normality.

Brian Twomey

Fed Funds V Eurodollars and EUR/USD V USD/JPY

Fed funds futures’ probabilities of future rate changes by:
Dec 2022 up by at least 25 bps 95.4%, down from 98.1% last week
Dec 2022 up by at least 50 bps: 77.2%, down from 86.8% last week
Feb 2023 – up by at least 25 bps: 96.6%, down from 98.3% last week.


The above percentages were factored from Treasury yields and are wrong. To factor actual probabilities correctly, 3 sources are paramount: Fed funds, Eurodollars and the 90 day interest rate.


The 90 day interest rate is most vital to all markets and all economies as the first short term rate established under Hoover in 1929 to fund the government. The Canadian central bank maintains 90 day rates for many nations from the first day of introduction.


Eurodollars are secondary to the actual Fed funds source to factor probabilities because Eurodollars are quoted, settled and traded by the 90 day rate and Eurodollars are off shore interest rates represented by Libor. Eurodollars answers the question how much money is held by banks overseas and at what specific rate.


Fed Funds as the onshore rate and Eurodollars are interest rates but specifically deposit rates. Exchange rates and currency trading is the trade of bank deposit rates. My daily trades are based on deposit rates and explains why daily trades are always correct.


Seen daily is reported probabilities to interest rate raises. This is the factor of Fed Funds and /or Fed Fund and Eurodollar Futures contracts. Contract prices change daily so therefore must probabilities change with contract prices.


Recall the RBNZ article and offered was a 43% chance to a raise or 67% to no raise. The RBNZ raised. How good was the factor to OCR and the 90 day rate as a forecast to probabilities. Zero.


As the Fed Meeting draws closer to raise reporting, chances are good the probabilities are within a fairly correct range. Chances are better than today’s probabilities which are wrong to an event 1 month away from today. This month is December and a new 3 month contract becomes pertinent as August now disappears from existence.


Fed Funds reported today as 0.08 and yesterday at 0.07. Fed Funds is related to Eurodollar Futures contracts as opposites. 100 – 8 or 1.00 – 0.08 = 92 as the Eurodollar contract. 100 – 7 = 93 or 93 represented as a Eurodollar futures contract.


To answer correct probabilities, today and in the future, its imperative to run Fed Funds data. Eurodollar contracts are offered for 10 years in the future so its imperative to run at least 10 years of Fed Funds data. More if necessary.


Answered to correct probabilities is Fed Funds oversold, overbought or sits doing nothing in ranges. By running the data is answered easily correct probabilities and permanent as well as a target price. The data offers not only a target price and probabilities but ranges to the actual price. The target price is far more vital than any probabilities.


Suppose the data reveals a deeply oversold Fed Funds rate.The trade is long financial instruments associated to a higher fed Funds rate and short financial instruments to an overbought rate. Probabilities becomes secondary.

Raise or not, what is the Fed imparting by a 25 point raise. Nothing except Fed Funds remains in a tiny range in between positive and negative probailities. Nothing to the overall curve. Nothing to exchange rate moves. Probabilities remain permanently bounded by 34% on either side of current prices. Its highly unlikely the Fed moves outside of the 34 % boundary lines.


Note RBNZ raised twice or 50 points and zero effect to the exchange rate.
Nothing to the curve for exchange rate traders but a giant significance to interest rate traders. The smartest traders among us are interest rate traders and worthy to follow if found. New Zealand’s 10 year yield dropped 13 points since the last raise, 8 points to the 5 year and 2 points to the 2 year.


Interest rate traders must be exact to their trades due to trade in tiny ranges. Fed Funds for example trades today from 0.08 to extremes at 0.06 to 0.12. Chances are good 0.12 doesn’t trade unless markets are hit hard by an unexpected outside event.


EUR/USD Vs USD/JPY


Current EUR/USD at 1.1301 and USD/JPY at 113.23. Both are exact oppsosite currency prices by Correlations and standard for currency markets. Both currently offer the same exact price. Watch for crossovers then take the trades in the direction of the cross. The current spread is 27 pips. Factor 27 pips to the trade and voila, profits exist without doing anything.


NFP ? 50 pips if lucky.


EUR/USD 5 vital numbers for today. 1.1239, 1.1254, 1.1267, 1.1324 and 1.1353.
USD/JPY 5 vital numbers for today. 112.66, 112.81, 112.92, 113.51 and 113.82.

Brian Twomey