Month: August 2019

International Emergency Economic Powers Act 1977

Below is a brief synopsis to a March 2019 Congressional Research Service 68 page report to answer by historical standards and to highlight the question to Economic Emergency and Presidential authority. Offered for educational purposes to synthesize factual context. Must stress, below derives not from original research.

The IEEPA contains a long and varied history since Woodrow Wilson from its WW 1 and 1916 /1917 derivation: Trading with the Enemy Act. The original purpose to Trading with the Enemy Act was an answer to Europe’s Executive Department regulation of economics and trade “with or without the support of respective legislatures.

Between 1916 -1917, Congress passed 22 laws granting President Wilson authority to seize control of United States private or foreign property for public use during the war. Private property was defined then as any property from Rail, Cars, Water, phones. Further laws granted Executive authority to Presidents over International Trade, Migration, investment, communication between enemies, FX, Gold and Silver, credit transfers.

Section 5 b under Trading with the Enemy Act was and lives today as crucial due to its grant of Presidents total Emergency Economic powers. The only difference today is 1970’s restrictions placed on 5b Emergencies over the decades to include Emergency timelines, cost, frequent reports, continued emergency declarations, nations, individuals and terrorist or enemy group targets.

Trading with the Enemy Act terminated in 1921 after WW 1 but revived by use of 5b under President Roosevelt in the 1930’s to include for all Western nations its new format: Presidential Emergency Powers during peacetime. Under 5b’s new format included during war and any national economic emergency declared by the president. Under any economic emergency, Roosevelt completely revived Wilson’s 5b powers to Trading with the Enemy Act.

Under 5b, Roosevelt declared a 4 day bank holiday to suspend all bank transactions to include regulation of foreign exchange, regulate bank credit transfers, seize private property, Gold, Silver and precious metals.

President Truman in the 1950’s began 5b Economic Emergencies to target nations: China and North Korea while the 1970’s began declared Economic Emergencies under newly passed Export Control laws as well as target Communist nations during the Cold War. One mainstay from Wilson to the 1977 International Emergency Economic Powers act of 1977 is declaration to the hoarding of Gold.

Related to Trump today is Lyndon Johnson’s 1968 Emergency declaration under 5b powers to limit Direct Foreign Investment by US companies to strengthen the Balance of Payment position of the United States.” Nixon then placed a 10% Tax on imports entering the United States at the same time the Gold Standard was lifted in favor of the FX free float.

By the 1970’s first review of Economic Emergencies and 5b, the United Stated declared 470 Emergencies without time limitations. Then began the revelation to declaration of Economic Emergencies to a dictator or a president who sought autocratic power due to the broad powers granted under Economic Emergencies without Congressional control.
Reforms began with passage of the National Emergencies Act of 1976 to eliminate past emergencies and 5b remained. A President must now inform Congress to Economic Emergencies and under a twice yearly review, Congress by vote may eliminate the Economic Emergency.

5b Provisons were not reformed in a true sense under the 1977 International Emergency Economic Powers Act except a President must inform Congress, submit reports, highlight exact Emergency or threat, provisions for foreign nations, individuals or groups blocked, frozen or seized assets. Economic Emergencies to Commerce was expanded under 5b since the Trading with the Enemy Act to include sanctions. A total of 54 Economic Emergencies were declared since 1977 and 32 remain ongoing today against an average duration of 10 years.

Domestically, Hurricanes are always declared Economic Emergencies, the 9/11 Terrorist attacks and Trump’s Immigration on the Southern Border Southern dilemma. The Iranian hostage crisis of 1979 remains the longest ongoing Economic Emergency.

Economic Emergencies under 5b expanded to include chemical and biological weapons, cyber attacks, religious persecution. Broad powers were expanded under 5b Transaction to include target individuals, groups, and provisions for law violations.

In Trade as past precedents to Trump’s China tariffs, Nicaragua and South Africa were restricted from Trade with the United States in the 1980’s, Trump targeted Venezuela’s Oil company Petro of Venezuela as well as many individuals related to trade.

Overall, as 5b Emergency Economic threats became apparent to national security, 5b provisions under the 1977 act expanded. Trump China Tariffs and Trade restriction contain every legality under 5b and the 1977 International Emergency Economic Powers Act.

Brian Twomey

1 Year Yield as % =1.7170  Interest Rate =2.7170

2 Year Yield as % =1.4860 Interest Rate 2.4860

3 Year Yield as % =1.4380 Interest Rate 2.4380

5 Year Yield as % =1.4230 Interest Rate 2.4230

7 Year Yield as % =1.4970 Interest Rate 2.4970

10 Year Yield as % = 1.5620 Interest Rate 2.5620

20 Year Yield as % 1.82 Interest Rate 2.82

Commercial Paper as % = 2.03 Interest Rate 3.03

GDP as % = 2.1 Interest Rate 3.1

CPI Annual as % =1.81 Interest Rate 2.81

CPI Quarter as % =0.3 Interest Rate 1.3

30 Year Yield as % =2.044 Interest Rate 3.044

DXY 98.20

Fed Funds Effective as % = 2.13 Interest Rate 3.13

Headline as % =2.25 Interest Rate 3.25.

Commercial Paper as % = 2.05 Interest Rate 3.05

Commercial Paper as % = 2.08 Interest Rate 3.08

GDP as % = 2.1 Interest Rate 3.1

Absolutely Powell Raised  rates to high and to quickly and as the end result was a severely misaligned yield curve. All Fed interest rates and GDP trade above the 30 year yield while Europe and the EUR trade between the 20 and 30 year yield.

Both Europe and USD suffer from severe mis alignments. Proper for USD is Fed interest rates below yields and for Europe, ECB interest rates above yields. Between FED and ECB interest rates and yields, convergence trades. Not sure ECB easing makes any sense due to yield and interest rate positions. Easing drops interest rates further yet ECB money supplies were always on the rise since 2008 in the current 12 billion vicinity and I always assumed the ECB goal was to not allow money supplies to deviate far from USD in order to hold the EUR at an acceptable exchange rate Vs USD.

Yet Eonia 0.636 V 2.13 Fed funds allows for a 1.49 spread. This spread must break wider.

For Fed Cuts, Trump is right, Powell must ease while the ECB must tighten, not ease to rightsize both systems. And especially now as GDP is in good shape as mentioned months ago from GDP long term averages. CPI below GDP as well is correctly aligned.

Brian Twomey

This post information is in extreme early development stages.

German Yields and Interest Rates Vs EUR and ECB Interest Rates

1 year Yields as % =-0.843 = Interest Rate 0.157

2 Year Yield as % =-0.906 = Interest Rate 0.094

3 Year Yield as % = -0.9516 = Interest Rate 0.0484

4 Year Yield as % =-0.9537 = Interest Rate 0.0463

5 Year Yield as % =-0.9257 = Interest Rate 0.0743

6 Year Yield as % =-0.899 = Interest Rate 0.101

7 Year Yield as % =-0.864 = Interest Rate 0.126

8 Year Yield as % =-0.8026 = Interest Rate 0.1974

9 Year Yield as % =-0.777= Interest Rate 0.223

10 Year Yield as % =-0.688 = Interest Rate 0.312

20 Year Yield as % = -0.4137 = Interest Rate 0.5863

ECB Interest Rates and EUR Trades here

-0.385 % = Interest Rate 0.615

-0.403 % =Interest Rate 0.597

-0.420 % = Interest Rate 0.580

-0.423 % = Interest Rate 0.577

-0.427 % = Interest Rate 0.673.

30 Year Yield as % =-0.224 = Interest Rate 0.776

EUR Trades between 20 and 30 year yields from 0.5863 to 0.7760 or 1897 points  and ECB 0.577 to 0.673 or 96 points but this will tighten in another day.

Brian Twomey

One time in any given year, currency prices are sufficiently deviated enough to offer the most easiest, most profitable, most guaranteed market derived trades. The profits earned by this one period will outperform money results by trading an entire year. Why is based on the question to define markets and trading and the action of market prices.

All market prices in all financial instruments travel from deviation to non deviation then back to deviation and non deviation again. Most profitable period to earn easiest money is at the peak of the deviation to trade to non deviation. Once non deviation is achieved, trades are difficult and won’t perform to the profit potential of highest deviations because prices are on the way to deviation again. This means traders can refrain from trading for almost an entire year to wait for the peak deviation period. Think in terms of a winner lottery ticket, a broken ATM machine that ejects money.

Trades past, present and future are defined as a target number and doesn’t require a chart, graph, stop, focus on central bank meeting, economic releases, tariffs. A target price must achieve its destination and it doesn’t have any other choice.

The amount of trades in any year is defined as 7 or 21 to cover 28 currency pairs but the amount depends on what is deviated. Total trades are higher if emerging market currencies are included as a deviated market includes all markets.

Non deviation to deviation is a process and takes 1 year to achieve maximum peak levels.

For the past 3 years, the 2nd quarter and sometimes part 3rd quarter was the time of highest peak levels.

Deviation to answer what is deviated means either USD and Non USD or cross pairs. Each year USD and Non USD take deviated turns to cross pairs. 3 years ago, USD and Non USD was most deviated and this means only 7 USD and Non USD were the trades. Last year, cross pairs were most deviated to USD and Non USD and this means 21 trades became available. This year, USD V Non USD are most deviated. Next year, cross pairs will become the most opportune trades for 21 total trades.

Trade duration to targets usually means as much as 1 quarter, 3 months or 12 weeks. Depends on the currency pair, deviation and time to achieve target.

I’m waiting for the time when USD and Non USD and cross pairs deviate at the same time to maximum peak and this current quarter is under this very question but only as it applies to GBP yet my suspicion is markets would never allow a greater distance than exists today and the past 3 year example.

A non deviated market refers to roughly 150 to 250 pips. This deviation is built into the price system naturally. By speculation, its impossible to achieve less. A non deviated market for the past 3 years travels to maximum peak deviation at roughly 600 pips. From 150 and 250 to 600 defines a fairly normal functioning yearly market. Higher than 600 refers to abnormality. Current year trades at abnormality. Abnormality can only mean the expected correction never arrived as anticipated and prices continued on their wayward path.

When cross pairs are deviated, USD and Non USD trade in tiny ranges while the opposite holds true. When USD and Non is deviated, cross pairs trade in tiny ranges. Markets allow deviations to achieve non deviation status.
The foundation to such price concepts must derive from the current 12 1/2 year economic period and 4th period but also the last quadrant in an overall 50 year time frame. In comparison, currency cycle trends are 9 years, a 3 1/2 year price lag to the economic cycle. The 9 years means mini cycles of 4 at 2.25 years while economic cycles are 4 periods of 3 years. Market prices are laggards to the economic cycles.

GBP pairs are most abnormal followed by AUD, NZD and EUR while USD is fine. AUD, NZD and EUR fall within regular bounds of overall normal functioning markets.

Below are currency pair price targets, normalization point and deviations then deviations to long term targets.

GBP/USD. 1.3600’s target, Normalization 1.2900’s = 900 pip deviation and 1600 pip deviation to target.

GBP/JPY. 147.00’s target, Normalization 136.00’s = 1000 pip deviation and 2100 pip deviation to target.

GBP/CHF. 1.3200’s target , Normalization 1.2400’s = 800 pip deviation and 1500 pip deviation to target.

GBP/CAD Normalization 1.6500’s and 700 pip deviation.

GBP/NZD Normalization 1.8800’s and 300 pip deviation.

GBP/AUD Normalization 1.7900’s and 200 pip deviation.

AUD.

AUD/USD 0.7400’s target, normalization 0.6900’s = 200 pip deviation and 700 pip deviation to target.

AUD/CHF 0.7375 target, Normalization 0.6800’s = 300 pip deviation and 800 pip deviation to target.

AUD/JPY 80.00 target, Normalization 74.00’s = 300 pip deviation and 900 pip deviation to target.

NZD

NZD/USD. 0.6800’s target, Normalization 0.6600’s = 200 pip deviation and 400 pip deviation to target.

NZD/CHF 0.6800 target, Normalization 0.6500’s = 300 pip deviation and 600 pip deviation to target.

NZD/JPY 72.00 target, Normalization 71.00’s = 300 pip deviation and 400 pip deviation to target.

EUR

EUR/USD 1.1547 target, Normalization 1.1216 = 300 pip deviation to target.

EUR/JPY 124.00’s target Normalization 121.00’s = 300 pip deviation and 600 pip deviation to target.

EUR/AUD. 1.5700’s target Normalization 1.6200’s = 200 pip deviation and 700 pip deviation to target.

EUR/NZD No deviation

EUR/CAD No deviation.

USD

USD/CHF No deviation

USD/JPY no deviation

CHF/JPY no deviation.

USD/CAD. 1.2800’s target, Normalization 1.3200’s = no deviation and 400 pip deviation to target.

CAD/JPY 84.00’s, Normalization 81.00 = 200 pip deviation and 500 pip deviation to target.

The Trade Facilitation and Trade Enforcement Act of 2015 calls for treasury to monitor macroeconomic and currency policies of major trading partners and conduct enhanced analysis of and engagement with those partners if they trigger certain objective criteria that provide insight into possibly unfair currency practices.

Key word Monitor, established Monitor list against 3 thresholds:

1. Trade Goods Surplus with US = $20 billion., 40 billion annual. Currently 21 nations in violation and accounts for 90% of all trade Surpluses with US.

The Monitoring List comprises Japan, Korea, Germany, Italy, Ireland, Singapore, Malaysia, and Vietnam

2. Material Current Account Surplus = 2% of GDP, Previous 3%. and

3. Persistent one sided FX Intervention net purchases = 2% GDP over 6 -12 months., previous 8 -12 months.

china earned right to 2 year Monitor list, also agreed at G20 to refrain from Competitive devaluation.

Currency Manipulation Threshold, speculation is 10% movement over 6 -12 months.

China qualifies from 2018 lows 6.92. Criteria is from Long Run average?.

Bretton Woods remains only strengthened. 1% movements speculation equals 1 to 10% allowable movements.

2. Gold and Silver in free float still completely connected to Gold and Silver Currencies. Gold to Gold Currency spreads however are never far from each other and the same for Silver and Silver currencies.

The Gold Silver Ratio is more than an indicator to trade Gold and Silver but allows for trades in currencies at the same time.

Brian Twomey

A new international monetary system was forged by delegates from forty-four nations in Bretton Woods, New Hampshire, in July 1944. Delegates to the conference agreed to establish the International Monetary Fund and what became the World Bank Group. The system of currency convertibility that emerged from Bretton Woods lasted until 1971.

U.N. Monetary Conference (Photo: Associated Press; Photographer: Abe Fox)

---

by Sandra Kollen Ghizoni, Federal Reserve Bank of Atlanta

The Mount Washington Hotel, White Mts., N.H. (Photo: Library of Congress, Prints & Photographs Division, Detroit Publishing Company Collection, LC-D4-19762)

The 730 delegates at Bretton Woods agreed to establish two new institutions. The International Monetary Fund (IMF) would monitor exchange rates and lend reserve currencies to nations with balance-of-payments deficits. The International Bank for Reconstruction and Development, now known as the World Bank Group, was responsible for providing financial assistance for the reconstruction after World War II and the economic development of less developed countries.

The IMF came into formal existence in December 1945, when its first twenty-nine member countries signed its Articles of Agreement. The countries agreed to keep their currencies fixed but adjustable (within a 1 percent band) to the dollar, and the dollar was fixed to gold at $35 an ounce. To this day, when a country joins the IMF, it receives a quota based on its relative position in the world economy, which determines how much it contributes to the fund.

In 1958, the Bretton Woods system became fully functional as currencies became convertible. Countries settled international balances in dollars, and US dollars were convertible to gold at a fixed exchange rate of $35 an ounce. The United States had the responsibility of keeping the price of gold fixed and had to adjust the supply of dollars to maintain confidence in future gold convertibility. The Bretton Woods system was in place until persistent US balance-of-payments deficits led to foreign-held dollars exceeding the US gold stock, implying that the United States could not fulfill its obligation to redeem dollars for gold at the official price. In 1971, President Richard Nixon ended the dollar’s convertibility to gold.

Brian Twomey

A new international monetary system was forged by delegates from forty-four nations in Bretton Woods, New Hampshire, in July 1944. Delegates to the conference agreed to establish the International Monetary Fund and what became the World Bank Group. The system of currency convertibility that emerged from Bretton Woods lasted until 1971.

The Mount Washington Hotel, White Mts., N.H. (Photo: Library of Congress, Prints & Photographs Division, Detroit Publishing Company Collection, LC-D4-19762)

The 730 delegates at Bretton Woods agreed to establish two new institutions. The International Monetary Fund (IMF) would monitor exchange rates and lend reserve currencies to nations with balance-of-payments deficits. The International Bank for Reconstruction and Development, now known as the World Bank Group, was responsible for providing financial assistance for the reconstruction after World War II and the economic development of less developed countries.

The IMF came into formal existence in December 1945, when its first twenty-nine member countries signed its Articles of Agreement. The countries agreed to keep their currencies fixed but adjustable (within a 1 percent band) to the dollar, and the dollar was fixed to gold at $35 an ounce. To this day, when a country joins the IMF, it receives a quota based on its relative position in the world economy, which determines how much it contributes to the fund.

In 1958, the Bretton Woods system became fully functional as currencies became convertible. Countries settled international balances in dollars, and US dollars were convertible to gold at a fixed exchange rate of $35 an ounce. The United States had the responsibility of keeping the price of gold fixed and had to adjust the supply of dollars to maintain confidence in future gold convertibility. The Bretton Woods system was in place until persistent US balance-of-payments deficits led to foreign-held dollars exceeding the US gold stock, implying that the United States could not fulfill its obligation to redeem dollars for gold at the official price. In 1971, President Richard Nixon ended the dollar’s convertibility to gold.

Brian Twomey

STATEMENT OF SEPTEMBER 25 BY SECRETARY OF THE TREASURY HENRY MORGENTHAU, JR.

1. The Government of the United States, after consultation with the British Government and the French Government, joins with them in affirming a common desire to foster those conditions which safeguard peace and will best contribute to the restoration of order in international economic relations and to pursue a policy which will tend to promote prosperity in the world and to improve the standard of living of peoples.

2. The Government of the United States must, of course, in its policy toward international monetary relations take into full account the requirements of internal prosperity, as corresponding considerations will be taken into account by the Governments of France and Great Britain; it welcomes this opportunity to reaffirm its purpose to continue the policy which it has pursued in the course of recent years, one constant object of which is to maintain the greatest possible equilibrium in the system of international exchange and to avoid to the utmost extent the creation of any disturbance of that system by American monetary action. The Government of the United States shares with the Governments of France and Great Britain the conviction that the continuation of this two-fold policy will serve the general purpose which all the Governments should pursue.

3. The French Government informs the United States Government that, judging that the desired stability of the principal currencies cannot be insured on a solid basis except after the reestablishment of a lasting equilibrium between the various economic systems, it has decided with this object to propose to its Parliament the readjustment of its currency. The Government of the United States, as also the British Government, has welcomed this decision in the hope that it will establish more solid foundations for the stability of international economic relations. The United States Government, as also the British and French Governments, declares its intention to continue to use appropriate available resources so as to avoid as far as possible any disturbance of the basis of international exchange resulting from the proposed readjustment. It will arrange for such consultation for this purpose as may prove necessary with the other two Governments and their authorized agencies.

4. The Government of the United States is moreover convinced, as are also the Governments of France and Great Britain, that the success of the policy set forth above is linked with the development of international trade. In particular it attaches the greatest importance to action being taken without delay to relax progressively the present system of quotas and exchange controls with a view to their abolition.

5. The Government of the United States, in common with the Governments of France and Great Britain, desires and invites the cooperation of the other nations to realize the policy laid down in the present declaration. It trusts that no country will attempt to obtain an unreasonable competitive exchange advantage and thereby hamper the effort to restore more stable economic relations which it is the aim of the three Governments to promote.

STATEMENT OF OCTOBER 13 BY SECRETARY OF THE TREASURY HENRY MORGENTHAU, JR. .

Supplementing the announcements, made by him on January 31,(3) and February 1, 1934,(3) to the effect that the Treasury would buy gold, and on January 31, 1934,(4) referring to the sale of gold for export, the Secretary of the Treasury states that thereafter, and until, on 24 hours’ notice, this statement of intention may be revoked or altered. the United States will also sell gold for immediate export to, or earmark for the account of, the exchange equalization or stabilization funds of those countries whose funds likewise are offering to sell gold to the United States, provided such offerings of gold are at such rates and upon such terms and conditions as the Secretary may deem most advantageous to the public interest. The Secretary announces herewith, and will hereafter announce daily, the names of the foreign countries complying with the foregoing conditions. All such sales of gold will be made through the Federal Reserve Bank of New York, as fiscal agent of the United States, upon the following terms and conditions which the Secretary of the Treasury deems most advantageous to the public interest:

Sales of gold will be made at $35 per fine ounce, plus one-quarter percent handling charge, and sales and earmarking will be governed by the regulations issued under the Gold Reserve Act of 1934.

Notes:

(1) Sometimes referred to as the “tripartite gentlemen’s agreement” or “arrangement.” A statement by the Secretary of State, Cordell Hull, in a Department of State press release of Sept. 26, 1936, reads in part:

“Naturally, I am immensely gratified to see a vitally important step in the direction of stable monetary arrangements.

“The action of the Treasuries of the three Governments in making simultaneous and virtually identical statements of policy should greatly strengthen the prospect of stability in international exchange relationships. This should result in further strengthening the basic conditions of our domestic recovery. The declarations of policy amply provide for taking into account the full requirements of internal prosperity. This advance toward stability should also greatly facilitate the reduction of excessive phases of quota, exchange controls, and of other excessive impediments to commerce between nations, which themselves were partly caused by exchange uncertainties. For it has been apparent for a substantial time that progress toward stability and the reduction of barriers to commerce should go forward concurrently, or as nearly as possible, simultaneously. The step taken is in harmony with our reciprocity trade-agreements program, as it is an indispensable part of any program for full and stable business recovery.” Back

(2) The Secretary of the Treasury announced on the same day that the United Kingdom and France had complied with the conditions specified in his statement for the purchase of gold from the United States for immediate export or earmark. On Nov. 24, 1936, he announced that reciprocal arrangements had been made also with Belgium, the Netherlands, and Switzerland as a result of their adherence to the principles of the tripartite declaration of Sept. 25, 1936. Back

Brian Twomey

The Tripartite Agreement was an international monetary agreement entered into by the United States, France, and Great Britain in September 1936 to stabilize their nations’ currencies both at home and in the international exchange markets.[1]

History

Following suspension of the gold standard by Great Britain in 1931 and the United States in 1933, a serious imbalance developed between their currencies and those of the gold bloc countries, particularly France. The devaluation of the dollar and the pound sterling raised import prices and lowered export prices in the United States and Great Britain.

In the United States and Great Britain sound money advocates were divided between those favoring reforms to stabilize the currency and others who called for an end to the gold standard and a managed currency.[2][3][4]

Agreement

The Tripartite Agreement was informal and provisional.[5] Subscribing nations agreed to refrain from competitive depreciation[6] to maintain currency values at existing levels, as long as that attempt did not interfere seriously with internal prosperity. France devalued its currency as part of the agreement. The remaining gold bloc nations, Belgium, Switzerland and the Netherlands, also subscribed to the agreement.

Subscribing nations agreed to sell each other gold in the seller’s currency at a price agreed in advance.[7][8] The agreement stabilized exchange rates, ending the currency war of 1931 – 1936,[9] but failed to help the recovery of world trade.

Brian Twomey

In the this post, forecasts, targets and weekly ranges for USD V MXN, RON, RUB, PHP, THB, TRY, BRL, MYR, PLN, SGD, CZK, HUF, ILS, INR, ZAR, CNY.

USD/CNY Close 6.9405. Overbought. Weekly range 6.9348 -6.8992. Target 6.8992. Must break 6.9704. Below 6.8636 targets 6.8280.

USD/BRL Close 3.9800, Deeply overbought. Short target 3.9230 then 3.8590. Must cross 3.8910. Weekly Range 3.8590 -3.9230. Below 3.8270 targets 3.7950.

USD/SGD Close 1.3773. Deeply overbought. Short target 1.3692 on break 1.3734. Weekly range 1.3692 -1.3776. Below 1.3650 targets 1.3608.

USD/CZK Close 23.1790. Short target 23.0156 on break 23.1488. Weekly Range 23.2820 – 23.0156. Break 22.8824 targets 22.7492.

USD/ILS Close 3.4939. Oversold. Short 3.4723 to target 3.5153. Weekly range 3.4293 -3.5153. Break 3.5583 targets 3.6013.

USD/INR Close 69.7000. Overbought. Short 70.0881 to target 69.6925. Weekly Range 70.4837 -69.6925. Break 69.2969 targets 68.9013.

USD/MYR Close 4.1575. Deeply overbought. Short target 4.1403 on break 4.1496. Weekly Range 4.1403 -4.1589. Break 4.1310 targets 4.1217.

USD/HUF Close 294.6400. Overbought. Short target 293.1945. Bonus short point 296.7659. Weekly Range 300.3375 -293.1945. Break 289.6230 targets 286.0515.

USD/THB Close 30.7150. Overbought. Short target 31.4329. Sell point 31.7613. Must cross 31.5971. Weekly range 32.0897 -31.4329. Break 31.1045 targets 30.7761.

USD/TRY Close 5.5611. Oversold. Good long point 5.5294 to target 5.5719. Weekly range 5.4021 -5.5719. Break 5.6568 targets 5.7417. Wide range Currency Pair.

USD/ZAR. Close 14.7885. Deeply overbought. Short target 14.5098 then 14.4134. Break 14.2206 targets 14.1242. Wide range currency pair.

USD/MXN. Close 19.3055. Severely overbought. Short target 19.2077 on break 19.2793. Weekly Range 19.3509 -19.2077. Break 19.1361 targets 19.0645.

USD/PLN. Close 3.8781. Deeply overbought. Short target 3.8431 on break 3.8676. Weekly range 3.8921 -3.8431.

USD/RON. Close. 4.2536. Neutral. Short 4.2697 to target 4.2464. Weekly range 4.2930 -4.2464. Break 4.2231 targets 4.1998.

USD/RUB. Close 65.2713. Overbought. Short target 64.7318 on break 65.0788. Weekly Range 66.1211 -64.7318. Break 64.0373 Targets 63.3427.

USD/PHP. Close 51.6500. weekly Range 51.4891 -51.9105. Break 51.4891 targets 51.0677. No thrills here

Brian Twomey

Last time US Treasury intervened in FX markets was March 2011, bought 1 billion JPY, sold usd.

Then Sept 2000 , bought 1.5 billion EUR.

Total 2 FX interventions since 1999, based on treasury Quarterly reports.

Speculation to Intervene on DXY is ridiculous.

intervention requires movements, non seen.

treasury doesn’t intervene on DXY as major reserve currency.

RBNZ last FX Intervention was 2013, 500 million to adjust NZD. Intervention policy = TWI deviation, Reserves and economic / trade threat.

RBA last fx intervention was crash 2008, Intervened 9 times Oct -Nov then Oct 2007 and Sept 2001.

RBA always announces intervention at 3rd of every month. Always Transacts in AUD.

SNB Threats threats, hardly intervenes. Last major FX Intervention was 2009 to allow EURCHF 1.2009 floor to fall.

BOE not yet sure here. Stay tuned. Basis to intervention is FX Reserves and Gold holdings. All decreased severely since January. Most holdings in premiere JPY, USD and EUR dropped precipitously. Great argument for intervention.

Much intervention in Money markets. Intervention is costly, never clear to results based on academic papers. New intervention is adjust daily and headline interest rates, less costly, guaranteed results. More to follow,

Normal traded currency Markets taken as a price whole deviate about 200 – 400 high side pips. This is fairly standard year to year. Small deviations however turn into large deviations then revert back to small deviations again. Then the cycle repeats again. Every year and  once in every year, deviation opportunity strikes and this is the actual time to trade in any given year as the year’s best and easiest trades become available. An entire year of trading can exclude in favor of the year’s easiest trades as traders will stack money faster than has ever been seen.

Few traders fully understand such concepts as the game of trading is actually Ping Pong matches between and among currency prices as well as USD Vs Non USD paired relationships to cross pairs. Stock indices contain the same deviated abstractions but at most is 600 points. From the 2893 SPX top for example, SPX is allowed a deviation to 3400’s.

The requirement is understand how to calculate deviations, understand long / short strategies then pick most opportune pairs to trade.

Last March / April 35 posted trades were traded against the year’s deviation at 600 pips. Deviated were majority cross pairs while USD and non USD pairs were fine. This year’s deviation majority are located in USD V Non USD Pairs while most cross pairs are fine. Fine means non deviated pairs remain stasis to allow deviate pairs to perform their work to normalization. Next year, Currency cross pairs will deviate. It takes approximately 1 to 2 quarters to deviate and 1 full quarter to normalize. Best and easiest money trades will last generally 1 quarter and many trades will exist.

GBP and EUR always deviate most against NZD’s and AUD‘s small deviations.

GBPUSD is easiest to measure 1500 pips against its 1.3600 long term target, Taken from its perfect opposite USDCAD 1.3200’s Vs GBPUSD 1.2100’s, an 1100 deviation. USDCAD‘s 1.2800’s target or 400 pips Vs 1100 -1500 GBPUSD informs higher GBP contains a long way and is the pair to trade due to its wide deviation. 

A long term target represents the normalization price.

In the GBP category, deviated pairs are as follows GBPUSD 1500, GBPJPY 1800 pips vs 147.00 target, GBPCHF 1300 pips Vs its 1.3200’s target. GBPEUR. Normal yet extremely low prices are GBP/CAD, GBP/NZD and GBPAUD.

Most deviated is GBP/USD and GBP/JPY then GBP/CHF for an average deviation of 1533 pips.

EURUSD is deviated 600 ish pips vs long term 1600’s target.

EUR/JPY is low yet deviated by the same 600 pips to its 124.00’s target.

EURCHF is deviated by 200 ish pips to 1.1200 target.

EUR/CAD sits just fine yet low.

EUR/NZD sits just fine.

EUR/AUD is deviated by 700 pips V long ter, 1.5600’s target.

EUR/GBP is deviated 600 pips to its 0.8500 target.

Most deviated is EUR/USD, EUR/JPY, EUR/AUD and EUR/GBP for an average deviation of 525 pips.

NZD

NZD/USD is deviated 300 pips to its 0.6800 target.

NZD/CAD sits just fine.

NZD/JPY is deviated 600 pips from its 75.00 target.

NZD/CHF Not sure, never a good trade to deviations.

AUD.

AUD/USD is deviated  600 pips to its 0.7400 target.

AUD/JPY is deviated 300 pips to its 75.00 target.

AUD/CHF deviated by 500 pips.

AUD/CAD and AUD/NZD not sure.

Most deviated AUD/USD, AUD/JPY and AUD/CHF for an average deviation of 466 pips.

USD

USD/CAD is deviated 400 pips to 1.2800 Target.

CAD/JPY is deviated by 500 pips to its 75.00 target.

CAD/CHF sits fairly fine.

USD/JPY is deviated by 400 pips to its 110.00 target.

CHF/JPY is deviated by 200 pips to its 110.00 target.

Most deviated as a whole are Non USD currency pairs and respective JPY cross pairs.

Brian Twomey