Month: October 2015

The break of market leader EUR/JPY 132.51 formalizes a vital inflection point in currency markets I’ve been watching for the past year. Its called generally Realignment but its an entire structural readjustment of markets and currency pairs. Realignment represents a new period that will last as little as 5 years and as much as 10 years. Every pair is affected and it means more very high volatility as the market settles into its new period. Market adjustments are price adjustments and can take anywhere from months to even 1 full year to settle fully to offer the past 2 examples. The major pairs like EUR/JPY adjust quickly but a pair like AUD/CHF takes much longer. So far what I see in realignment is AUD, NZD and EUR type pairs lower for many years. We are finally witnessing a clear delineation in USD Vs EUR monetary policy. This confirms further Realignment and the 3rd since years 98 and 2000.

Two big points for AUD/USD are falling lines at 0.7223 and 0.7285. The RBA like the ECB is working hard to drop AUD much lower. An interest rate drop appears to be on the way. AUD movements are not tied to EUR/USD as Correlations are minus 40% but highly correlated to NZD at + 79.

Targets near term are 0.6894 and 0.6864, further out 0.6509 is the current bottom.

AUD/USD. Bottom. 0.7066. Range break above 0.7148, Below 0.7054 and 0.7030. Overbought sell point 0.7128. Strategy. Longs above 0.7105, target 0.7128. Points on the way up, 0.7113, 0.7118, 0.7123, 0.7128.

Shorts below 0.7100, target 0.7083, then 0.7066 bottom. AUD strategy is continue short, sell rallies and look for much lower prices.

Brian Twomey, Inside the Currency Market, btwomey.com

The dead position of GBP and all GBP pairs cannot remain at current levels. Its getting ready for a big pop. But either way I work the numbers, the direction of the pop is not determined. Caution. The ranges are actually wide but GBP has been contained for far to long.

The big breaks above are located at 1.5401 and 1.5458.

GBP/USD. Bottom. 1.5282. Range break above 1.5517, Below 1.5203 and 1.4950. Overbought sell point 1.5396, Failure point 1.5365. Strategy. Longs above 1.5362, target 1.5396 then reverse to 1.5379. Points on the way up, 1.5365, 1.5368, 1.5396.

Shorts below 1.5359, target 1.5321. Watch here for reversal to 1.5359 and higher. Points on the way down, 1.5339, 1.5324, 1.5311, 1.5302, 1.5282. Point 1.5321 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

As an economic release since 1990 and viewed over 25.3 years or 103 quarters, GDP ranges vary widely from lows at 2.7 to 4.7 highs but wide ranges are partly explained due to 6 consecutive negative quarters seen in the 2009 period. Previously, GDP was negative twice in the past 25 years and both quarters, 24 and 25 years ago or 96 and 97 quarters, were negative 0.1 and 0.2. To exclude 8 negative quarters in 25 years, GDP was positive every quarter and ranged from 0.2 – 4.8 highs. Further exclude 0.2 and 4.8 because 0.2 was seen twice and 4.8 once then the optimal 25 year range would become 0.8 – 4.5, a mid point of 3.7. Current 3.9 GDP was last seen 11.1 years ago or 45 quarters. The GDP path since 4.1 highs 11.1 years ago experienced a continuous drop and resulted in negative 2.6 and 2.8, seen 6 and 7 years ago or 24 and 26 quarters.

A current consensus forecast of 1.6 assumes every average from 1 – 25 years breaks lower. A 2.3 drop from 3.9 to 1.6 assumes GDP flies through to the lower bound range seen 7 and 8 quarters ago at 1.7 and 1.5. It assumes the 9 year average breaks at 1.98. Since the last negative 1.5 quarter 23 months ago, GDP remained above 2% in 12 of the last 22 quarters and below 10 quarters or 4.2 and 2.2 years.

In order for GDP to break lower, the 21 and 25 year averages and accompanying medians must break at 2.78 and 2.70. The range becomes caught between the 15 and 25 year averages from 2.70 – 2.27. A break of 2.27 then reveals ranges between the 5 and 3 year averages from 2.27 – 2.16. A break of 2.16 then ranges become 2.16 – 2.05 at the 3 and 6 year averages. Only a break of 2.05 contends with the 9 year average at 1.98.

GDP at 3.9 is overbought at the 3, 6 and 9 year averages but is just fine at the 15, 21 and 25 year averages. Longer averages reveal a trend underway while short averages inform a correction in the larger uptrend is warranted. Averages 3, 6 and 9 years also reveal maximum peaks at 4.12, 4.18 and 4.28 to offer context to overbought 3.9. Longer averages at 15, 21 and 25 peak at 5.08, 6.33 and 6.35, not likely to be seen anytime soon but to inform what a trend underway means.

What further informs a correction and / or lower GDP is the significant peaks seen at the 3, 6 and 9 year averages. Yet peaks could be derived from out of sync averages as the composition among averages lack uniformity.

GDP targets along the horizon begin at 3.97, 3.91, 3.21, 2.86, 2.74 and 2.71. What is seen from the data is a GDP quarterly correction but not a dip to the extent forecast. GDP appears to be trundling along way above the 2% point seen in 9 of the last 14 quarters. Over time and if forecasts hold, its USD positive and should be sufficient for a Yellen Fed Funds Hike.

Brian Twomey, Inside the Currency Market, btwomey.com

Big Bottoms for AUD/USD are located at 0.6901, 0.6523, 0.6490 and 0.6391. The current intraday bottom is found at 0.7172. Intraday, shorts remain below 0.7239 and 0.7300. Range breaks occur at 0.7113, 0.6967 and 0.6843. Ranges are opening wider,finally.
The best sell point intraday is found at 0.7226. Intraday, AUD/USD is in a new downtrend provided 0.7239 and 0.7300 holds. Its not oversold not overbought yet way oversold in long and medium terms. But that’s not new.

I would continue short, short on rallies and look for AUD to head lower. Short term I would begin targets at 0.7113.

Brian Twomey, Inside the Currency Market, btwomey.com

If prices take off before a post then the post becomes a mute point. I can’t write a forecast after the fact. More of the same here is expected. We remain committed to EUR pairs, GBP is still not worth the trouble. EUR/USD slid 200 pips, GBP/USD dropped 70. See what I been saying about GBP. AUD and NZD are not thrilling either. AUD is dead stuck in its ranges. NZD sits on monster supports. On the economic side, GDP for NZD, AUD, UK, USD will post shortly. USD unemployment will post as I have data dating to 1948 inception. I’m interested in EUR/USD Correlations Vs Gold/Silver Ratios. Silver Correlations Vs EUR/USD shockingly failed. I want to view Gold and EUR/USD but Gold in USD terms, maybe EUR, depending on findings.

This morning post and on investing.com, I reported 1.0895 as the big break to see EUR/USD lower. Those points are found exactly at 1.0870, 1.0844, 1.0822 so far, so far. The bottom for now holds at 1.0672. Big break points above remain at 1.1154, 1.1220, 1.1595 and dynamic 1.1385. The overall range today and possibly next day is 50 pips. This is a severe decline and could mean the next day or so will be slow moving.

EUR/USD. Bottom. 1.0954. Range break above 1.1151, Below 1.0870, 1.0844, 1.0822. Overbought sell point 1.1046, Failure point 1.1028. Strategy. Longs above 1.1011, target 1.1046 then reverse to 1.1027. Points on the way up, 1.1015, 1.1020, 1.1028, 1.1037, 1.1046.

Shorts below 1.1009, Target 1.0982. Watch here for reversal to 1.1009 and higher. Points on the way down, 1.1000, 1.0991, 1.0983, 1.0975, 1.0968, 1.0954 Bottom. Point 1.0982 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Last week’s break at 1.1236 and 1.1154 instilled in EUR/USD a fresh downtrend despite not only oversold intraday but a current 1.1010 price historically trading below 15, 20 and 25 year averages from 1.2457, 1.2145 and 1.2221. Draghi’s comment regarding economic risks to the downside was enough to break the rising lines at 1.1236 and 1.1154 but what sealed the downtrend was possible QE extension and an interest rate drop into further negative territory. Currently 13 months after adoption of early 1900’s economist Silvio Gesell’s negative interest rate policies, the only benefit was a lower exchange rate from 1.3900 highs to 1.0400 lows. Inflation from September 2014 and Gesell policy adoption was positive 0.4 August 2014 but dropped to negative 0.2 December 2014, 0.0 by April 2015 and positive 0.1 August 2015.

The larger EUR/USD range is found between 1.0672 and 1.1385. Both lines are dynamic and moving as well as the 3 month forward line at 1.1102. Inside 1.0672 and 1.1385 above lies a dropping line now at 1.1220, a stasis line at 1.1154 and an overall slow moving descending line at 1.1595. On the downside from 1.0672 – 1.1395 exists a big break point in the current vicinity of 1.0895. A break at 1.0895 then EUR/USD heads far lower. Draghi spoke the words of short EUR/USD and its the way forward as long as resistance points above holds.

One pair in the EUR/USD short scenario to watch is EUR/JPY and the break of 132.51 as I still contend a break would force an overall currency market realignment that would last for years as the currency market heads into its new periodic change. The last change was seen with the 2008 crash and lasted now 7 years. The prior periodic change lasted from 1998 – 2008, 10 years. The new change is not only upon us but generally periodic changes in currency market durations are on average 5 – 6 years. A periodic change for the EUR/USD means lower for much longer, possibly years. EUR/JPY is the key.

Brian Twomey, Inside the Currency Market, btwomey.com

From 15.84 current price, Silver’s historic 25 year average, 150 month or 12.5 year mid point is located at 17.18. The point at 17.18 also corresponds to the 2 year average median line. Current price trades between the 1 and 15 year average from 16.02 and 15.06. The 15 year average at 15.06 is the result from Silver’s historic May 2001 bottom at 5.95 as price then peaked at 51.67 in April 2011. As Silver dropped from 51.67, the 15 year average crossed below every average from the 25 to 1 year. Last time Silver saw 5.95 was September 1942 so current price is less than 10 points from historic bottoms.

A break of 15.06, targets next averages at 14.83, 13.58, 12.59, 10.97, 7.76 and 5.57. Above 16.02, targets averages at 16.17, 17.18, 17.55, 17.86, 19.77, 19.88, 20.56, 22.74 and 25.47. What drives current price is the 5 year average at 25.47. Price drops become oversold yet the average is not oversold. Current price is above the 15, 20 and 25 year averages at 15.06, 12.59 and 10.97. Significant peaks are seen in averages 3, 7, 10, 15, 20, 25 and is derived from serious misalignments. The 10 year for example is to low and should be positioned at the 3 year. The 20 year crossed the 25, the 15 year crossed the 1 year.

Targets to align averages from 1 – 25 begin at 11.82, 14.83, 15.27, 15.79, 15.66, 17.89, 16.82, 16.96,21.86 and 33.89. Despite 5.95 historic lows, the best target is 33.89. Current price is 9.89 points from bottoms and 18.05 points from best target above.

The best Correlation Silver maintains V EUR/USD is found at the 2, 5 and 20 year averages as the 2 year correlates 90%, 5 year at 64% and 20 year at 60%. Remainder averages are all below 50%. The 1 year for example correlates 18%, 7 at 30%, 15 year just crossed at 58%.

The best view long term in Silver is historic oversold and way oversold Vs EUR/USD. Silver’s range from 1915 – 1968 saw 5.63 lows September 1939 and highs at 14.51 in 1968. Since 1968, Silver saw first ever highs at 110 in 1979. Short term resolution decides Silver’s fate as breaks must be seen at 15.06 and 16.02.

Brian Twomey, Inside the Currency Market, btwomey.com

Draghi magic words, economic risks to the downside, open to extend QE date, open to more bond purchases, will consider interest rate drop. Dansk bank already Forecast a Refinance Rate drop in December to -0.30. One year later, was the economics of Silvio Gesell and negative interest rates the answer. So far no.

This afternoon trade, Long from 1.1121 failed at 1.1139 then reversed to break 1.1121 to 1.1079, + 48.

1.1153 and 1.1224 are big breaks above. 1.1124 descends while 1.1153 sits idle so far. EUR/USD is heading much lower, 1.0800’s look good. Note how 1.1153 and 1.1223 stand within tonight’s forecast.

EUR/USD. 1.1051. Range break above 1.1223, 1.1276, Below 1.0991. Overbought sell point 1.1153, Failure point 1.1129. Strategy. Long above 1.1108, target 1.1153 then reverse to 1.1144. Points on the way up, 1.1114, 1.1119, 1.1129, 1.1141, 1.1153.

Shorts below 1.1106, Target 1.1079. Watch here for reversal to 1.1106 and higher. Points on the way down, 1.1096, 1.1090, 1.1085, 1.1080, 1.1079, 1.1065, 1.1051 Bottom. Point 1.1079 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Overnight trades, 1.1360 – 1.1302, + 58 pips.

EUR/USD. Bottom 1.1066. Range break above 1.1239, 1.1006, 1.0954. Overbought sell point 1.1168, Failure point 1.1144. Strategy. Longs above 1.1123, Target 1.1162 then reverse to 1.1145. Points on the way up, 1.1124, 1.1134, 1.1144, 1.1155, 1.1168.

Shorts below 1.1121, Target 1.1093. Watch here for reversal to 1.1121 and higher. Points on the way down, 1.1117, 1.1105, 1.1100, 1.1095, 1.1080, 1.1066 Bottom. Point 1.1093 must cross to go higher.

Bigger picture, 1.1152 and 1.1226 big point breaks. Why the big drop. Remember these words, they are trying hard to drop this Euro to far lower levels. It will take time. Time came, its here. The same story remains.

Brian Twomey, Inside the Currency Market, btwomey.com

Normally EUR/CAD classifies as a neutral currency pair, neutral meaning its caught between EUR/USD and USD/CAD and doesn’t wander far from the center. EUR/CAD’s neutrality is seen for example in market moving economic announcements. Sometimes it moves, others times it assumes its neutral stasis position. When EUR/CAD moves and trends, its unstoppable. When its neutral, its a dead issue. It wanders and moves through its various market periods of big moves or dead stasis. Through dead periods, it serves well as a hedge.

EUR/CAD is interesting through its current period due to an 85% Correlation Vs EUR/USD and 92% Vs USD/CAD and viewed from 1 year. Part of the correlation explanation is found in EUR/USD’s 191 pip range over the past 8 days from 1.1304 to 1.1495 and USD/CAD 309 pip range over 14 days from 1.2835 – 1.3144.
The final part of the explanation is found in WTI Crude as its range is holding between 42.87 and 47.56. On a short term day by day basis from MA’s ranging between 5 – 20 days, EUR/USD, USD/CAD and crude are sharing an ongoing inverse and positive correlation Longer term, crude correlations Vs USD/CAD are clearly negative and positive V EUR/USD. Correlations inform a clearly tight market all around yet a warning as an impetus for a breakout is coming. What changes the Correlations is resolution of EUR/USD below at 1.1150 and 1.1256 and above at 1.1595. USD/CAD supports are many but the big number is found at 1.2249. What EUR/CAD is telling us is it can’t hold its present position due to an alignment problem.

From current 1.4835, EUR/CAD supports below are many and solid beginning with 1.4641, 1.4617, 1.4585 and 1.4565. Long, medium and short term, EUR/CAD is way oversold and like all EUR cross pairs has the potential to fly higher. A break of 1.4565 below targets 1.4300. Intraday, averages 5, 10 and 20 are driving EUR/CAD prices and are approaching overbought. The extremes in prices are excellent sell points and found at 1.4969, 1.4957 and 1.4928. The 50 day is found at 1.4824.

Brian Twomey, Inside the Currency Market, btwomey.com

ECB and the Draghi Sunshine band in the morning to borrow my friend Peter’s phrase.

QE is scheduled to end September 2016. If Draghi hints at date extension, if he hints at expansion by bond purchases, sour economy, not looking good, inflation and GDP to remain low. Then EUR drops like a rock. Watch bottom and bottom range breaks.

EUR/USD. Bottom. 1.1303.Range break above 1.1454, 1.1481, Below 1.1268, 1.1242. Overbought sell point 1.1401, Failure point 1.1387. Strategy. Longs above 1.1362, target 1.1401 then reverse to 1.1370. Points on the way up, 1.1364, 1.1376, 1.1387, 1.1394, 1.1401.

Shorts below 1.1360, target 1.1332. Watch here for reversal to 1.1360 and higher. Points on the way down, 1.1352, 1.1345, 1.1339, 1.1334, 1.1318, 1.1303 Bottom.Point 1.1332 must cross to go higher.

Further points 1.1239, 1.1154 must breaks to see EUR far lower. Draghi wants a far lower EUR, its in his interests economically and for exports. The ECB is again working hard and fast to drop the EUR curve, its falling nicely.

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD. Bottom. 1.1288. Range break above 1.1438, Below 1.1252, 1.1226. Overbought sell point 1.1396, Failure point 1.1371. Strategy. longs above 1.1346, target 1.1396 then reverse to 1.1371. Points on the way up, 1.1348, 1.1360, 1.1371, 1.1384, 1.1396.

Shorts below 1.1344, target 1.1316. Watch here for reversal to 1.1344 and higher. Points on the way down, 1.1336, 1.1329, 1.1324, 1.1318, 1.1309, 1.1288. Point 1.1316 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

EUR overnight trade dead perfect as well as reversal point, I didn’t check.

EUR/USD. Bottom. 1.1297. Range break above 1.1407,Below 1.1301, 1.1274. Overbought sell point 1.1409, Failure point 1.1383. Strategy. Longs above 1.1355, target 1.1409 then reverse to 1.1382. Points on the way up, 1.1358, 1.1363, 1.1371, 1.1383, 1.1396, 1.1409.

Shorts below 1.1353, target 1.1325. Watch here for reversal to 1.1353 and higher. Points on the way down, 1.1346, 1.1340, 1.1334, 1.1327, 1.1318, 1.1297 Bottom. Point 1.1325 must cross to go higher.

Other pairs, feel free to write brian@btwomey.com

Brian Twomey, Inside the Currency Market, btwomey.com

EUR/USD. Bottom. 1.1304. Range break above 1.1412, Below 1.1308, 1.1268. Overbought sell point 1.1415, Failure point 1.1391. Strategy. Longs above 1.1362, target 1.1415 then reverse to 1.1388. Points on the way up, 1.1378, 1.1391, 1.1403, 1.1415. Watch 1.1412 range point.

Shorts below 1.1360, target 1.1332. Watch here for reversal to 1.1360 and higher. Points on the way down, 1.1353, 1.1347, 1.1334, 1.1318, 1.1304 Bottom. Point 1.1332 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Current 45.91 Oil price is back trading between the 25 and 30 year averages at 47.56 – 42.87. Above 47.56 targets next averages 48.91, 52.67, 54.48 and 56.49. Further out averages include 64.57, 65.75 and 77.89. Below 42.87, targets 31.97 and 27.26,

Above, 3 giant Median lines are descending on current prices at 88.80, 93.53 and 94.32. As oil prices range or drop then Median lines assist to push down all averages from 1 – 30 years. All averages are below Medians. All averages are dropping and lost about 20 points since Oil collapsed. The days of $100 oil are gone as any price rises are correction in a large downtrend.

What drives prices are averages 3, 5, 7 and 10 year as those averages remain slow movers in relation to current prices. The 5 year at 87.92 is most oversold followed by the 3 year ( 83.78), then 7 ( 81.99 ) and 10 year at 81.23. The 42 – 47 range held because price drops leaves the 5 year oversold. It will take time for the 5 year average to drop further. The 5, 7 and 10 year however reveal significant Peaks followed by the 1 year at 56.49. The larger picture reveals oil direction and price is heading lower.

To align the distribution from 1 – 30, targets must be seen at 14.25, 23.12, 27.26, 37.58, 44.53, 54.70, 60.99, 62.75, 62.89, 70.17.

Oil is a risk on asset and correlates with EUR/USD from 1 – 7 year averages as follows: 0.48, 48%, 83%, 94%, 96% and 77%. Oil negatively Correlates with USD/CAD from 1 – 5 year averages as follows: -86%, -93%, -86%, and – 82%. The view is the overall picture. On a day to day basis, changes can and will occur and happened this week as EUR/USD and USD/CAD averages from 5 – 20 day revealed juxtaposed Correlations.

Oil is again in a range and its a range trade until 42 or 47 breaks.

Brian Twomey, Inside the Currency Market, btwomey.com

Morning. EUR/USD short 1.1372 – 1.1332, + 40, see long 1.1344 – 1.1358, + 14 more pips.

EUR/USD. Bottom. 1.1293. Range break above 1.1403, Below 1.1297, 1.1257. Overbought sell point 1.1404, Failure point 1.1380. Strategy. Longs above 1.1351, target 1.1404 then reverse to 1.1377. Points on the way up, 1.1367, 1.1380, 1.1392, 1.1404.

Shorts below 1.1349, Target 1.1321. Watch for reversal here to 1.1349 and higher. Points on the way down, 1.1342, 1.1336, 1.1330, 1.1323, 1.1307, 1.1293 Bottom. Point 1.1321 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

Overnight, EUR/USD 1.1337 to 1.1386, + 49.

EUR/USD. Bottom. 1.1316. Range above 1.1426, 1.1466, Below 1.1320. Overbought sell point 1.1427, Failure point 1.1403. Strategy. Longs above 1.1374, target 1.1427 then reverse to 1.1400. Points on the way up, 1.1377, 1.1383, 1.1390, 1.1403, 1.1415, 1.1427.

Shorts below 1.1372, target 1.1344. Watch here for reversal to 1.1372 and higher. Points on the way down, 1.1365, 1.1359, 1.1353,1.1346, 1.1330, 1.1316 Bottom. Point 1.1344 must cross to go higher.

1.1150 and 1.1239 remain big breaks below

Brian Twomey, Inside the Currency Market, btwomey.com

On RBA statement, AUD/USD sell point 0.7281 dead stopped 0.7275, Bottom 0.7223 held. AUD/CAD broke 0.9458, dead stopped 0.9471, before my point 0.9474Lengthy RBA statement, I will review and report in the morning.

EUR/USD saw 14 pip range 1.1319 – 1.1333.

EUR/USD Bottom. 1.1279. Range break above 1.1362, Below 1.1309, 1.1243. Overbought sell point 1.1393, Failure point 1.1367. Strategy.Long above 1.1337, Target 1.1393 then reverse to 1.1365. Watch 1.1362 for possible fail. Points on the way up, 1.1341, 1.1354, 1.1367, 1.1380, 1.1393.

Shorts below 1.1335, Target 1.1307. Watch here for reversal to 1.1335 and higher. Points on the way down, 1.1329, 1.1323, 1.1316, 1.1310, 1.1293, 1.1279 Bottom. Point 1.1307 must break to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

AUD/CAD From current 0.9430, the larger range is found between 0.9275 to 0.9754. To see 0.9275, next big break at 0.9373 must occur first. Above lies 0.9458, 0.9474 and 0.9485.

AUD/JPY. From Current 86.60, next big breaks above are located at 87.50, 87.49 and 87.97 intraday. Points 87.50 and 87.49 are two separate Moving Average lines that happen to be traveling together and assisting to force current prices lower. AUD/JPY just broke both points so the downtrend is fresh. What’s next below are two points located at 84.10 and 81.16. Both are severely oversold. But, as long as AUD continues its downtrend, as long as the RBA threatens to lower OCR, as long as commodity prices drop and as long as economic news continues to deteriorate, AUD/JPY goes lower and targets 84.10.

AUD/CHF. This pair remains severely oversold at current 0.6932. AUD/CHF is currently at life time lows, never seen before in 62 years to offer oversold context. If Australia ever recovers economically, AUD/CHF is the long to hold for extended periods. The best I have above are intraday at 0.6995 and 0.7011.

AUD/NZD. This pair is trying to recover from crisis lows and is slooowly moving towards its target. It remains oversold since 2008 and is in the same condition today. AUD/NZD has miles to go higher. The best points I have above is 1.0888 and 1.1099. AUD/NZD is in buy dips mode for a long long time in the future.

Brian Twomey, Inside the Currency Market, btwomey.com

Last RBA statement, low commodity prices due to increased supplies, East Asia and China slowing, Terms of trade falling, economy slooowly expanding, yet GDP slow overall, employment increasing. Inflation contained but target seen in 1 – 2 years, Low OCR borrowers increasing, Housing increased, construction increasing from Housing.

Index of Commodity prices fell 1% in September, 2.7% in AUD terms led by declines in Lamb and Coal yet Iron Ore increased, a main staple for Australia.

Like New Zealand, Australia increased down payments for housing and helped so far but only pockets of good exists such as Sydney and Melbourne. If terms of Trade are falling, means AUD Tradeables V Non Tradeables inside the CPI numbers has severe problems, same for New Zealand. Its big warning to lower OCR and the main reason to do so. Lower OCR lowers AUD and in turn assists in trade expansion, to meet CPI target by increases in Tradeables. Tradeables are production within Australia used to ship overseas, mainly US and Asia. Australia is a fighting nation and will survive this downturn as the majors figure out their difficulties.

AUD remains the same story as previous. The sell point is 0.7281. My own MA system reveals 0.7260 and 0.7303 are vital breaks. The bottom is 0.7223. AUD is stuck in long time ranges and the range trade is the only way to view AUD.

AUD above 0.7303, next 0.7380 and 0.7382. Below 0.7140 and 0.7138, 0.6969, 0.6957.

Brian Twomey, Inside the Currency Market, btwomey.com