Author: twbrian

Volume

Above: Average, high and Low

Overnight Collateralized

Rates of transactions settled
on the same day as the trade
date and maturing the
following business day in the
collateralized call money
market

Overnight Uncollaterialized

Rates of transactions settled
on the same day as the trade
date and maturing the
following business day in the
uncollateralized call money
market.

Overnight Tona Rates

As at 2023/08/02 10:21 JST

Brian Twomey

Is Tona the same as TORF. This 10 am Tokyo and 8:00 pm EST rate is the first USD/JPY fix for every Japanese trading day. Rates trade from 8 pm est to 4 am est then the next set of interest rates are released.

To obtain Tona rates, must go through the BOJ or pay Quick Corp much money.

EURYO Yen Tibor appears to be on the discontinuation list for publication and use for markets.

The BOJ will never change headline interest rates because tiny movements in BOJ and Interest rate numbers massively changes the entire Japanese system and exchange rates. Also, the YCC bands maintain 0.5 to 1.5.

1m = 0.9466

3m = 0.94406

8 m = 0.9550

Total Interest rates

1.001

0.9550

0.9466

0.94406

0.939

0.913.

What we have is a break down to factor USD/JPY miles ahead and far better than normal 4 am rates.

Tokyo Term Risk Free Rate (TORF)

TORF

(Unit:%)

As at 2023/08/01 17:00 JST

Historical TORF

Brian Twomey

The YCC bands remain at the primary 1.5 to 0.5 vantage points above and below the 10Y to 3m yields. The BOJ’s words were flexible yet rigid to the 10 year. The 10 year yield at 1.5 held inside the bands since 2015 / 2016 implementation but today broke above for the first time by trading to 0.563 or 1.563.

For next week, the JGB 10 year contains easy ability to trade to 0.5964 and 0.6051 to test the BOJ resolve to flexible yet rigid. Inside the upper 1.5 band, the 10 year must trade to 0.50 at minimum but currently big break lines exist at 0.4920 and 0.45.

The lower side to the band at 0.5 is not the issue due to the impossibility to break as BOJ 0.9 interest rates won’t break below anytime soon. The bottom 0.5 side held easily since 2016 implementation to YCC due to the position of BOJ interest rates.

A break of the bottom band at 0.5 requires a BOJ interest rate change lower from 0.9 and any speculation to an interest rate change by the BOJ won’t happen anytime soon as the present Japanese financial system operates perfectly.

The YCC bands in relation to USD/JPY factors as 211.71 vs 94.09 and 282.28 Vs 70.57. USD/JPY then averages to 152.90 and 176.42. The 300 pip move for USD/JPY derived from the 1.5 side of the YCC band at 211.71 Vs 94.09.

The overall context to YCC as fairly irrelevant to USD/JPY is understood from the current JGB yield curve from 3 month to 10 year. USD/JPY as average prices: 141.15, 141.76, 141.84, 142.65, 142.82, 147.45, 155.78.

The Week

USD/CAD long term trades from 1.3110 and 1.3171 to 1.3300 and 1.3325. USD/CAD for the past 7 weeks traded within the 1.3000 – 1.3300 range and this range will hold for weeks to come. A break of 1.3110 places USD/CAD in a 251 pip range from 1.2859 to 1.3110.

USD/CAD’s trade strategy over next months is short the highs near 1.3300’s and long bottom as range trades is the only strategy available.

EUR/USD supports below are located at 1.0969, 1.0972 and 1.0979. The strategy for the week is long to target 1.1109 and just prior to vital 1.1131. EUR/USD overall range is located from 1.0979 to 1.1131. The wider range is located at 1.0972, 1.1131, 1.1353 and 1.1598.

DXY again for week 2 is trapped between low 101.00’s and overbought at low 102.00’s. DXY caught between averages is enough for markets to range trade next week and hold up progress to break vital levels.

EUR/USD Vs DXY

EUR/USD 1.1096 Vs DXY 100.86
EUR/USD 1.1138 Vs 100.44
EUR/USD 1.1223 Vs 99.60

GBP/USD higher must break 1.2879. GBP/USD ranges from 1.2702, 1.2762 and 1.2879 to 1.2923. GBP/USD overbought for the week begins above 1.2923 amd short is the only strategy.

EUR/AUD and GBP/AUD

Both EUR/AUD and GBP/AUD begin the week deeply overbought and entries are located Anywhere to target EUR/AUD 1.6469 and 1.6379 on a break of 1.6469. Longer term EUR/AUD targets 1.6076 on a break of 1.6288. GBP/AUD targets easily 1.9169 then 1.9007.

USD/JPY targets a break at 141.21 then 140.14. USD/JPY’s big break for lower is located at 139.07.

EUR/JPY targets 154.64 and 152.71 must cross lower to trade 150.00’s.
GBP/JPY targets 179.50 and 176.71 is required for much lower prices. The line up for monthly averages trades between the 34 to 38 year averages from 176.61, 178.02, 179.57, 181.07 and 184.14.

The overall trade strategy for USD/JPY and JPY cross remains short until USD/JPY trades 131.00’s and 128.00’s.

GBP/NZD and EUR/NZD

Both GBP/NZD and EUR/NZD trade massive overbought for the week as shorts is the only strategy. GBP/NZD must trade to minimum 2.0687 from 2.0865 then the next big line at 2.0512. GBP/NZD longer term targets 2.0240 and 2.0014.

EUR/NZD for the week targets easily 1.7761 then 1.7707.

GBP/CAD next vital line above is located t 1.7098 and shorts target 1.6968. GBP/CAD’s overall range is located from 1.7098 to 1.6961 and 1.6860.

EUR/CAD for the week is not favored. The vital break is located at 1.4600 to target 1.4659.

AUD/USD remains inside 0.6741 to 0.6905 and no changes over many weeks. AUD/USD trades deeply oversold and targets easily 0.6823 and 0.6848. Overbought EUR/AUD is strangling AUD/USD ranges. EUR/AUD must trade lower to assist wider ranges to AUD/USD.

NZD/USD trades against massive range problems and troubled by the same situation as AUD/USD. Overbought EUR/NZD poses the main range dilemma. EUR/NZD must trade lower to open wider ranges for NZD/USD. NZD/USD big break for higher is located at 0.6221. Long only trade strategy applies to NZD/USD and AUD/USD.

Brian Twomey

EUR/USD Vs DXY short and long term. The direction for EUR/USD is higher and lower for DXY to include all USD currencies and USD/EM.

EUR/USD 1.1096 Vs DXY 100.86

EUR/USD 1.1138 Vs 100.44

EUR/USD 1.1223 Vs 99.60

EUR/USD 1.1433 Vs 97.49

EUR/USD 1.1644 Vs DXY 95.39

EUR/USD 1.1854 Vs DXY 93.28.

Brian Twomey Contact brian@btwomey.com

The YCC bands from 10Y – 3m located just outside Call rates above and below tops and bottoms. Year 2019 reflected Covid

Brian Twomey

USD/CZK Shorts below 21.6688 to target 21.5358, 21.4692 and 21.4027

USD/HUF Shorts below 344.1206 to target 340.28, 338.36, 336.45

USD/MYR Short below 4.5507 to target 4.5372, 4.5236, 4.4965

USD/SGD Short below 1.3355 to target 1.3339, 1.3323, 1.3290, Caution 1.3274

USD/THB Short below 34.5102 to target 34.4616, 34.4130, 34.3158

USD/KRW Short below 1289.37 to target 1286.20, 1283.04, 1276.71

Brian Twomey

DXY is held this week by 100.39 and 101.07. A hold at 101.07 then DXY has easy ability to reach 102.00. Below 101.07, places DXY in a 100.39 to 101.07 range and lower weekly target at 99.43 and 99.35.

DXY is expected this week to achieve the 99.00 lows then the 101.07 and 100.39 lines will provide upper resistance next week in order for DXY to begin targets at 98.00’s. Overall, DXY traded an easy and consistent run since the 114.00 top last September to 100.00 lows in April. Since April, DXY traded a 500 pips range from 104.00 to 99.00’s.

BOJ

Focus on the BOJ will remain as the BOJ embarked on an extraordinary set of circumstances to ovethaul the views and methodologies to factor with intense focus to Japan’s financial system. Not only is the old BOJ gone but the new and improved BOJ is working on upgrades to the existing changes as well as a long term view to overall consumer and financial prices.

The only threats to the BOJ is economic problems to the larger economies of Europe and the United States as well as affects to Japan’s trade balance to Imports and exports. USD/JPY is most prone to radical exchange rate changes and adjustments to imports and exports. Imports and exports is the main focus every month as this category decides monthly changes to USD/JPY and possible intervention.

In the BOJ statement, we will hear a drumbeat of the word prices as this concept is most watched and viewed by the BOJ from Japan’s Statistics as well as Europe and the United States.

USD/JPY begins the week deeply overbought and targets a break at 140.90 for much lower prices. Not only is USD/JPY overbought from a weekly perspective but severely overbought from longer term averages. Focus is the break lower at 138.77 and continuation of short only strategies.

USD/JPY Correlations

JPY cross pair Correlations continues as overall market problems. GBP/JPY Vs USD/JPY runs +93% and GBP/USD Vs GBP/JPY also runs +96%. USD/JPY Vs EUR/JPY runs +91% and EUR/USD Vs EUR/JPY at +89%.

The Correlational deadlock has held for months and a breakout is required to determine ownership of JPY cross pairs by either USD/JPY or EUR/USD and GBP/USD. Most vital to the breakout is JPY cross pairs will begin progress to long term targets rather than trade in large 500 pip ranges.

EUR/JPY vital break is located at 152.41 to target miles lower. EUR/JPY hit the break point 2 weeks ago at 153.00’s and traveled to 158.00 highs. EUR/JPY trades overbought for the week and targets a break at 156.43 to trade 155.00’s. Overall, EUR/JPY must produce progress to the 152.99 break.

USD/JPY and JPY cross pairs continues a short only strategy due to massive overbought from lower averages.

GBP/JPY for the past 5 weeks traded 500 pips from 179.00’s to 184.00. We’re short again for the week to target 179.00’s. Miles lower for GBP/JPY must break 176.26.

EUR/USD is held solidly below by 1.0982 and 1.0971. EUR/USD requires a break at 1.1131 to target 1.1194 then short.

GBP/USD like EUR/USD is held below by 1.2698 and 1.2674. Higher for GBP/USD must break 1.2876 to target 1.3000’s then short.

AUD/USD break above 0.6746 then trades a range from 0.6746 to 0.6909. Longer term targets are located at 0.6852 and 0.6881. AUD/USD for the week contains no ability to trade 0.6800’s. AUD/USD for the past 6 weeks traded 0.6800’s to 0.6500’s then 0.6500’s to 0.6800’s.

NZD/USD must break 0.6217 then 0.6231 to trade the range from 0.6231 to 0.6396.For the week, NZD/USD trades deeply oversold. Longer term, NZD/USD targets 0.6341 then the challenge at 0.6396.

EUR/USD 1.1124 Vs GBP/CHF 1.1126.

GBP/CHF is the problem currency in the EUR/USD Vs GBP/CHF relationship as EUR/USD correlates to GBP/CHF at – 0.53% and -0.29 to GBP/USD Vs GBP/CHF. USD/CHF is the driver currency at USD/CHF Vs GBP/CHF at +0.48%.
GBP/CHF levels are to low at 1.1126 and GBP/CHF should trade 1.1300’s on a break of 1.1258.

EUR/AUD trades massive overbought from lower averages at 1.5800’s and 1.5700’s. The required break is found at 1.6279. This line will eventually break to target 1.8210 and 1.6070. EUR/AUD overbought matches to low and oversold AUD/USD and AUD/EUR.

GBP/AUD must cross below 1.8823 to target easily 1.8702 and 1.8633. Targets at 1.8702 and 1.8633 is just the start to overall targets at 1.8500’s and 1.8400’s.

The overall theme to JPY cross pairs and wide rangers EUR/AUD and GBP/AUD is 500 pip ranges and no progress towards completion to long term targets. Ranges are trading and wandering without purpose at the impulse of market inputs.

GBP/NZD must trade to 2.0685 and lower by the break at 2.0766. The overall target is the break at 2.0391 to trade 2.0201 and this target is just the beginning.

EUR/NZD and GBP/NZD begin the week at Richter Scale overbought and easy money shorts for the week.

GBP/CAD no rush exists to trade GBP/CAD as the big move was traded last week from 1.7300’s to 1.7100 then the 1.7100 break to current 1.6900’s. GBP/CAD trades 1.6861 to 1.6961 and 1.7100.

EUR/CAD also no rush to trade EUR/CAD. Current supports are many and solid at 1.4500’s and 1.4400’s. Short strategies is the way this week preferably in the 1.4800 vicinity.

Best and easiest trades for the week as follows: USD/JPY, GBP/JPY, EUR/JPY, GBP/NZD, EUR/NZD, GBP/AUD, EUR/AUD. All shorts.

For USD/JPY, GBP/JPY and EUR/JPY, shorts prevail for at least 500 and 600 pips lower.

Brian TwomeyContact: brian@btwomey.com

To date, we were subjected to Fed Dot Plots or 5 year Median averages. A Median average is located below a simple average. Whenever a Dot Plot is seen, the actual Fed Funds rate and projections for raise or lower is higher due to ability to view simple averages. Markets no longer work on Median Averages.

The ECB in 2016 for example eliminated Median averages for Fix Prices and changed to simple averages. All central banks today factor simple averages and all markets work in simple averages.

If a Median average is wrong or off then percentages to raise, lower and on hold are also wrong. As I showed in the recent RBA and Fed examples, Percentages are fixed and never change no matter the level of the interest rate.

Percentages today are based on the levels of certain interest rate market instruments and assessed just prior to a central bank meeting. Percentages are wrong because it is not known if the market instrument levels are overbought, oversold or just right. The percentages then represent one moment in time. Percentages are derived from the far away abstracts of actual market prices.

The intent of the 2012 Dot Plot invention is to assess member views to raise, lower or remain on hold. As member views are known then Medians are plotted from the dot plot and forecasts derived. Despite member views, what does the actual Fed want to Fed Funds changes is never considered. Each member view factored as 1 vote and a vote that maybe overridden by the full committee.

How good are Dot plots answers by the academics at the Fed in a 2019 paper titled Plotting interest rates: The FOMC’s projections and the economy.

For 2015, 2016, 2017 and 2018, projections in the short run were off by 1 percentage point off by 2 points in the medium term and 1 percentage point for the longer run.

I see Dot Plot projections for July at 5.6 for Fed Funds or one and done as they say. Where is 5.6 as banks forecast Dot Plots but don’t offer the context to price location.

Written December 2022 by 31 years of monthly data or 372 data points. The overall Fed Funds range is located from 1.69 to 6.95 and 6.98. The 70% Confidence interval is located at 5.65 and 7.85 at the 90% mark.

The 5.6 level was already known 7 months ago. Are we one and done.

Here’s Fed not correct projection reports for 2023. The Fed from projection reports factors Fed Funds at 5.1 for 2023 or a range from 5.13 to 5.37. Funds Funds current 5.08.

Fed Funds from current 4.33 to 5.1 to 5.37 informs at least 70 points or approximately 50 points to raises remain available.

Since December, the Fed raised twice at 50 points.

The actual data always shows the correct forecasts, price locations, projection and target prices. Despite what the Fed does next, Fed Funds will soon trade at 4.00’s in quick time.

DXY and USD is just getting started on the overall downtrend.

How do we know the Fed reached its peak to raises is not only found in the 31 year monthly average data but again lifted from our new friend Arturo Estrella as the yield curve master at the Fed.

The risk to the Fed based on the 10 -3 month inversion is deep recession as GDP shrinks when the Fed raises.

After the inversion showed signs of receding early in the month, the spread is settling back down to a lower level, with the July average so far at -1.50%.

Below is the Full Dot Plot for 2022 – 2023.

On the Y-axis is the fed funds rate, and on the X-axis is the year for which officials gave their forecast.

Brian Twomey

At the height of intervention, USD/JPY was trading 2.35 pips to DXY and EUR/USD. Recall this concept, For every 0.001 change in BOJ interest rates, USD/JPY moves 14 and 15 pips. This explains USD/JPY movements as interest rates are the only driving force to currency and all market prices yet 14 and 15 pips is extraordinarily wide to ranges.

Since BOJ threatened intervention, USD/JPY and JPY cross pair prices slowed considerably. For June and July, BOJ interest rates are in the exact same place without changes. Price movements changed.

From 2.35, USD/JPY Vs DXY 2.02 pips.

USD/JPY Vs EUR/USD 1.78 pips

USD/JPY Vs EUR/JPY 1.20 pips

USD/JPY Vs GBP/JPY 1.16

For comparison

EUR/USD Vs DXY 1.13 pips

EUR/USD Vs EUR/JPY 1.48

Brian Twomey

AUD/USD Number 5. True to form and the form hasn’t changed in many years. I went back to the 1970’s for context. AUD/USD won’t change in years to come for big number 5 in the daily price path.

Most Important 0.6750 and 0.6776 Vs 0.6785, 0.6789, 0.6793, 0.6798, 0.6806, 0.6810, 0.6815

Bottom 0.6747 achieves by 0.6755 and 0.6764

Upper Target 0.6815

Continuation Fail 0.6798

Note upper target and continuation Fail. The number 17 as next vital number to AUD/USD daily price path.

Day trades and all this information today has been written in mathematical stone upon the currency free float in 1972. The trade tool is 10 fingers or a $5 calculator.

Brian Twomey

The BOJ comprehensively reformed the financial system in 2016 /2017 by YCC bands, JGB 10 to 3 month, trade weight index, Corporate goods index, PPI and Imports/ exports, Inflation at 2%. Slight yet positive changes occurred to BOJ interest rates.

The current review announced by Ueda is a 25 year comprehensive analysis to factors at work, successes and failures within Japan. The predominant theme of the review is the effect on prices at every step for the past 25 years to financial markets, monetary policy and the overall financial system.

The wider view to prices incorporates questions to globalization, Japan’s aging population, wage and price analysis, effect on corporations and households.

The first workshop begins December to address monetary policy, financial markets and the financial system.

The BOJ established a website in order to follow the overall review at every step along the way.

If YCC bands eliminates then the 10Y to 3 month rates remain and no changes exist to the system. The question of loose or ultra loose policy described by market people exists a question to a valid assessment. The BOJ informs clearly to dates and money spent for purchase and sales of JGB into 2023 and 2024.

The YCC bands are irrelevant to Monetary or any BOJ policy and not worth a discussion. YCC bands maybe viewed as a Forward Guidance for the yield curve at 0.5 to 1.50 where JGB purchases and sales are found and here is found the possible relevance. But anybody can easily view the 3 month to 10 year and factor 0.5 and 1.50.

The two major questions personally. Will the BOJ add daily interest rates or will the current system remain This question determines if USD/JPY remains the same financial instrument or will USD/JPY change its current character to ranges and its relationship to DXY as long ago established by the BOJ.

The BOJ interest rate system is a very special yet different and unique system to the 20 or so central bank interest rates I currently know and understand. To add an interest rate is the same as the ECB for example to slash maturities from 7 to current 5. Eliminate maturities slows the price speed and slashes ranges. In the BOJ example, add an interest rate slows USD/JPY price speeds and compresses ranges.

DXY

DXY traded 94 pips this week inside the range from 99.00’s to 102.00’s. DXY next week trades a fairly normal 200 pip range from 99.00’s to many points at 101.00’s. DXY’s next vital low is located at 98.89 and deeply oversold.

EUR/USD continues to trade overbought from 1.0900’s and inside the same range from 1.1129 to 1.1354. Lows achieved 1.1174 this week while 1.1354 becomes massive overbought. EUR/USD challenges 1.1129 on breaks at 1.1186, 1.1157 and 1.1142 then 1.1080 and 1.1024. EUR/USD ranges expand when DXY ranges increase.

Overall Currency markets are slow and range bound due to compressed ranges to DXY and EUR/USD. If DXY and EUR/USD trade condensed ranges then all markets are afflicted by trading small ranges.

USD/JPY broke above 139.31 to trade upper 139.00’s as written Sunday. USD/JPY requires a break at 138.67 to target 137.99, 137.58 and 136.48. USD/JPY current target is 137.99 then eventual 131.00’s. Caution to 141.00 target as the BOJ Export line is located at 141.30. Short only strategy is the only viable option.

EUR/AUD trades overbought next week at 1.6500’s and Richter Scale overbought at 1.6600’s. The eventual targets are found at 1.6204, 1.6067 and 1.5974. Break at 1.6262 is mandatory for a lower EUR/AUD.

Oversold GBP/AUD confronts a vital line at 1.8829. Targets as reported in previous weeks remain at 1.8703, 1.8633 and 1.8541. If GBP/AUD holds at 1.8829 then 1.9100 may trade easily.

EUR/AUD and GBP/AUD operate as short only strategies for best profits.

GBP/USD Completed target at low 1.2900’s and traded to 1.2867. GBP/USD line up operates as follows: 1.2669, 1.2699, 1.2876 and 1.3256. Current range 1.2876 – 1.3256. GBP/USD at 1.2600’s is solid and strong while 1.2876 decides GBP/USD longs and shorts for next week. Overbought and short begins at GBP/USD 1.3000’s.

AUD/USD trades 0.6745 to 0.6908. AUD/USD ranges are severely compressed and will remain condensed for next week. Best AUD/USD target is 0.6851. A higher AUD/USD assists to drops in EUR/AUD and GBP/AUD.

NZD/USD trades a 162 pips range from vital 0.6236 to 0.6398. Overbought begins next week at middle 0.6300’s.

Low and oversold NZD/USD holds downside progress to GBP/NZD and EUR/NZD. NZD/USD strategy is long and shorts for GBP/NZD and EUR/NZD.

GBP/NZD traded this week 2.0800’s to 2.0500’s. Break below 2.0367 targets 2.0188 then 1.9900’s. Next week shorts at 2.0800’s again to target 2.0559 then 2.0463.

Overbought EUR/NZD must break below 1.7591 to target long term destinations at 1.7482, 1.7350 and 1.7301.

GBP/CAD from last week: Must trade minimum 1.7100’s. GBP/CAD traded lows at 1.6949 from 1.7300’s and now sits on solid supports at 1.6961 and 1.6906.

GBP/CAD ranges from 1.6906, 1.6961 to 1.7101, 1.7267 and 1.7499.

EUR/CAD traded 164 pips this week Vs GBP/CAD at 383.

EUR/CAD many and solid supports sit at 1.4400’s, 1.4500’s and 1.4600’s. We’re short next week at upper 1.4700’s to lower 1.4800’s.

GBP/JPY shorts next week at upper 181.00 to lower 182.00’s to target low 179.00’s and 178.00’s.

Overbought EUR/JPY shorts next week at 157.00’s targets 154.00’s then 153.00’s.

Brian Twomey

The BOJ comprehensively reformed the financial system in 2016 /2017 by YCC bands, JGB 10 to 3 month, trade weight index, Corporate goods index, PPI and Imports/ exports, Inflation at 2%. Slight yet positive Changes occurred to BOJ interest rates.

The current review announced by Ueda is a 25 year comprehensive analysis to factors at work, successes and failures within Japan. The predominant theme of the review is the effect on prices at every step for the past 25 years to financial markets, monetary policy and the overall financial system.

The wider view to prices incorporates questions to globalization, Japan’s aging population, wage and price analysis, effect on corporations and households.
The first workshop begins December to address monetary policy, financial markets and the financial system.

The BOJ established a website in order to follow the overall review at every step along the way.

If YCC bands eliminates then the 10Y to 3 month rates remain and no changes exist to the system. The question of loose or ultra loose policy described by market people exists a question to a valid assessment. The BOJ informs clearly to dates and money spent for purchase and sales of JGB into 2023 and 2024.

The YCC bands are irrelevant to Monetary or any BOJ policy and not worth a discussion. YCC bands maybe viewed as a Forward Guidance for the yield curve at 0.5 to 1.50 where JGB purchases and sales are found and here is found the possible relevance. But anybody can easily view the 3 month to 10 year and factor 0.5 and 1.50.

The two major questions personally. Will the BOJ add daily interest rates or will the current system remain This question determines if USD/JPY remains the same financial instrument or will USD/JPY change its current character to ranges and its relationship to DXY as long ago established by the BOJ.

The BOJ interest rate system is a very special yet different and unique system to the 20 or so central bank interest rates I currently know and understand. To add an interest rate is the same as the ECB for example to slash maturities from 7 to current 5. Slash maturities slows the price speed and slashes ranges.

Brian Twomey

The BOJ’s YCC bands are located from the JGB 10 year yield to 3 month while BOJ interest rates trade between the bands. Most vital is the Yield curve operates sufficiently and not inverted by the 3 month trading above the 10 year. The exchange rate position and trading ability to movements is also perfect by trading interest rates between the 10 year and 3 month.

The 10 year and 3 month contains significance as the 10 year minus 3 month provides information for the best location in the words of the BOE, the domestic interest rate. Further to the 10 year and 3 month is the accuracy to predict recessions in X quarters ahead. The BOJ chose the perfect location for the YCC bands.

Meet Arturo Estrella from the Fed. Mr. Estrella has been writing and researching the yield curve for 30 years and I read many of his papers.

In Estrella’s latest paper, Recession forecasts are derived from 10 – 3 month, 10 year to 2 and the Fed’s guide at 18 month to 3 month by using forward rates. Most accurate is the 10 – 3 month from data dating to the 1970’s. The 10 to 2 year is afflicted due to lags. The darling of market people at the 10 – 2 finds misfortune.

Estrella. The bottom line is that the forecast from 10y-3m is the best we have at this point. Using data for 2022 Q1, the probabilities of recession implied by this spread are 0.6% over 4 quarters, 1.5% over 6 quarters and 6.3% over 8 quarters. The imperative is to use longer time horizons for more accurate forecasts.

Does Estrella’s forecast also imply no recession by 99.4%, 98.5% and 93.7% and how reliable is yield curve forecasts today under no market movements to yields.

The question to Recession must imply all economies and all nations since all yields and all interest rates per nation trade in the same locations on the yield curve.

Yields 10 – 3, Inversions and Interest Rate Positions

The overall question is how are central banks in relation to the BOJ.

DXY and Fed. The 10 -3 is inverted and interest rates trade around the 3 month rate..
EUR/USD and ECB. The 10 – 3 is inverted and interest rates trade around the 3 month rate.

USD/CAD and BOC. The 10 – 3 is inverted and interest rates trade around the 3 month rate.
AUD/USD and RBA. The 10 – 3 is inverted and interest rates trade around the 3 month rate.

NZD/USD and RBNZ. The 10 to 3 is inverted and interest rates trade around the 3 month rate.
USD/CHF and SNB. The 10 – 3 month is inverted and interest rates trade around the 3 month rate.

USD/PLN and. The 10 – 3 month is inverted and.
USD/RON. The 10 – 3 month is not inverted.

USD/CZK. The 10 – 3 month is inverted.

The commonality to markets is trade around the 3 month interest rate and all economies contain inverted 10 – 3 spreads. The BOJ is the lone survivor.

Brian Twomey

USD/CHF last week dropped 353 pips and the 2nd biggest week since the week of November 7 at 588 pips. USD/CHF in November dropped from 0.9900’s and traded to lows last week at 0.8565 or 1419 total pips.

Since November and 36 weeks, USD/CHF trades an average weekly range of 183.77 pips. To exclude the 2 week outliers at 353 and 588 then the average weekly range for 34 weeks factors as 166.91.

DXY for November 7 dropped from 111.27 to lows last week at 99.58 or 1169 pips. DXY traded its best day in November at 499 pips and Friday’s 2nd best day at 298 pips.

Since November and 36 weeks, DXY traded a weekly average of 171.94 pips. To exclude both outliers and 34 week then DXY traded an average of 158.61 pips.

USD/CHF 2 big lines exist at 0.8959 and 0.9235. Both lines as well as all average lines above 0.9235 to 0.9500’s are all at Richter Scale oversold.

Weekly Targets: 0.8681, 0.8751, 0.8820, 0.8890 and 0.8924. USD/CHF should trade 0.8820 easily.

USD/CHF is a forecast currency for DXY by use of a calculator. DXY 99.96 + USD/CHF 0.8612 = 100.82. DXY 99.96 minus 0.8612 = 99.09.

DXY weekly Range for longs, shorts and vital 100.82 = 99.09 and 100.82. Using market prices is always close but never perfectly exact.

USD/CAD Vs DXY

DXY 99.96 +1.3212 USD/CAD = DXY 101.28. DXY 99.96 minus USD/CAD 1.3212 = 98.63.

Overall 100.82 and 101.28 Vs 99.09 and 98.63

USD/CAD opens Sunday at 1.3206 to 1.3217. DXY 0.9996 divide 1.3212 = 1.3217.

USD/CAD 1.3212 Divide DXY 0.9996 divide USD/CAD = 1.3206

Brian Twomey

Oversold DXY begins the week ranging 200 pips from 99.00’s to 102.00. Limited downside exists for DXY this week as the week trades long USD. Overall, 102.00’s are solid lines and many exist . As DXY trades the 99.00’s to 102.00’s ranges this week, the 102.00 lines will continuously drop into future weeks. Next on the agenda is 98.72 and 98.11 then on the way to a giant and vital break 96.00’s.

Overbought EUR/USD remains trading within 1.1123 to 1.1351. Lower requires a break at 1.1180 and 1.1151 to target the break at 1.1123. We’re looking for the break at 1.1123 to then target 1.1093, 1.1076 and 1.1068. Overall, EUR/USD trades overbought to oversold DXY and USD and the downside for the week is a correction to relieve overbought. Good shot for next week to long again for the break above 1.1123.

EUR/CHF trades massive oversold and targets 0.9740 and 0.9754 and just prior to the big break at 0.9768. EUR/CHF correlates to EUR/USD at minus 93%. As EUR/USD traveled higher last week, EUR/CHF dropped. This week will see the reverse as EUR/USD lower to EUR/CHF higher.

EUR/USD Levels: 1.0906, 1.0954, 1.1123, 1.1351, 1.1597. EUR/USD levels should hold for about the next 3 months and regardless to market events, central bank interest rate changes and economic releases.

USD/CAD Vs CAD/JPY

CAD/JPY sits deeply oversold just above vital break for lower at 104.45 and contains easily ability to break lower to target low 103.00’s. A CAD/JPY break lower would become the first JPY cross pair to break significant levels.

Oversold USD/CAD complies to oversold DXY. Higher for USD/CAD represents a correction unless USD/CAD trades above 1.3337. The CAD/JPY break at 104.45 ensures long USD/CAD for the week.

GBP/CAD Vs EUR/CAD

GBP/CAD trades a 500 pip range from 1.7098 to 1.7500. Current GBP/CAD trades not only at the top range but also trades deeply overbought from lower averages.

GBP/CAD must trade to minimum lower 1.7100’s just to relieve overbought. For the week, we’re short to 1.7100’s yet not trying for a big grand slam.

Doesn’t matter where GBP/CAD ends the week, ranges from 1.7098 to 1.7500 and overbought remains.

EUR/CAD supports are located at 1.4400’s and 1.4500’s and many exist. EUR/CAD trades massive overbought. Low 1.4700’s are good targets.

EUR/CAD and GBP/CAD together should profit easily 100 and 150 pips each.
Overbought AUD/USD trades 0.6714, 0.6904 and 0.7056. AUD/USD trades massive overbought from 0.6700’s. Big break 0.6904 held last week.

NZD/USD trades massive overbought from 0.6200’s. NZD/USD ranges from 0.6211, 0.6395, 0.6559.

Once overbought is complete this week for AUD/USD and NZD/USD, longs for next week to break NZD 0.6395 and AUD/USD 0.6904.

USD/JPY begins the week in a horrible position and sits last on the overall currency trade list. Big break for higher is located at 139.31. Higher DXY then 139.31 has every ability to break and USD/JPY travels to upper 139.00’s. The break above 139.31 temporarily delays the long term downtrend and lower targets.

Next USD/JPY target lower is located at 136.68.

JPY cross pairs all trade oversold for the week and not close to significant breaks. GBP/JPY ranges this week from 182.07 to 179.24 and big break for lower at 176.13 and EUR/JPY at 151.94.

USD/JPY and JPY cross pair strategy remains short only until target completion. A DXY break below 98.00’s to target next 96.00’s would greatly assist a much lower USD/JPY and JPY cross pair break at vital levels.

GBP/NZD waits on a break at 2.0349 to target 2.0100’s while EUR/NZD must break 1.7559. Short only strategies for both is the only way forward. NZD/USD will correct lower this week and long for next week. GBP/NZD and EUR/NZD next week could easily break 2.0349 and 1.7559.

EUR/AUD and GBP/AUD continues with short only strategy adopted since last December and January. EUR/AUD targets lower 1.6300’s and lower 1.9000’s for GBP/AUD.

GBP/USD trades overbought inside 1.2872 to 1.3254 and targets 1.2900’s for the week.

Overall, DXY and USD runs the show this week in a 200 pip range. Only minor levels exist for DXY between 99.00’s to 102.00’s.

Brian Twomey

April = 1.0734, 1.0940, 1.1132, 1.1374, 1.1623

July 14 = 1.0891, 1.0951, 1.1121, 1.1350, 1.1596

April to July range = 1.0642 – 1.1244 or 602 pips.

What changed? Nothing. Bottom averages changed 157 pips while remainder averages failed to move.

EUR/USD Total averages April = 889 Vs July 705 or 184 pip difference.

Brian Twomey

DXY at 99.00’s finally at the 50 year monthly average. This should inform EUR/USD at its 50 year monthly average at 1.1200’s and explains the jump in EUR/USD and GBP/USD.

EUR/USD Vs DXY

1.1333 Vs 98.72

1.1393 Vs 98.11

1.1515 Vs 96.90

1.1820 Vs 93.86

1.2124 Vs 90.81

1.2428 Vs 87.77.

Notice the distance from 1.1393 to 1.1515. If 1.1500’s trade, this will take time as 1 or 2 months. I wouldn’t target 1.1500’s until the resolution of 1.1300’s. A possible break at 1.1300 ranges from 1.1300’s to 1.1500’s. Smarter is a gazillion range trades exist for much profit.

We’re taking market prices and market prices are never correct. The tops are at 1.1300’s for the next month or so.

Accurate = 1.0890, 1.0951, 1.1121, 1.1350, 1.1596. EUR/USD trades mid range and 1.1121 is the big line. But 1.0800’s are Richter scale overbought.

GBP/USD current 1.3117 Vs USD/CAD 1.3114. GBP/USD Vs USD/CAD is the same relationship as EUR/USD Vs DXY. The only difference is GBP Vs CAD numbers are observable and easily analyzed while EUR/USD V DXY contain 2 separate numbers and takes a minute to analyze.

Known to current GBP/USD Vs USD/CAD is this relationship cannot hold. We must and will see a separation. USD/CAD is oversold to overbought GBP/USD.

Fresh numbers: GBP/USD 1.2620, 1.2653, 1.2869, 1.3253, 1.3671. Mid range and 1.2869 as big number.

GBP/USD big break number 1.3195 and the range is 1.2869 to 1.3253. What does a 384 pip range due for us. Nothing except wasted words.

We know big topline break at 1.3195. We know 1.2600’s are solid lines and won’t break anytime soon , if al all.

Exact numbers: 1.3195, 1.3154, 1.3113, 1.3072, 1.3032, 1.2950, 1.2909. At 1.2909 competes against 1.2902. Informs 1.2909 and 1.2902 is also solid lines and won’t break anytime soon. Now we have all range numbers to last probably into next Friday or beyond.

Middle number and most vital 1.3072. Where does 1.3072 fit today.

GBP Day Trade

GBP/USD

Long Short Line 1.3108 

Most Important 1.3058 and 1.3099 Vs 1.3116, 1.3124, 1.3132, 1.3141, 1.3157, 1.3165, 1.3174

Bottom 1.3042 achieves by 1.3058 and 1.3075

Upper Target 1.3174

Continuation Fail 1.3141

GBP/USD Viewed differently

Above 1.3116, 1.3124, 1.3132, 1.3141, 1.3157, 1.3165, 1.3174

Long Short Line 1.3108

Bottom: Bottom 1.3042, 1.3058, 1.3075, 1.3099

Top number today 1.3141 and 1.3174. Top number to range 1.3195.

AUD/USD Big break line 0.6902. Held all week at 0.6894. NZD/USD 0.6393. Violated today to 0.6410. NZD/USD 0.6393 is 2 days old so exact maybe at 0.6410.

AUD/USD and NZD/USD failure to follow by vital breaks to EUR/USD and GBP/USD maybe informs how overbought is EUR/USD and GBP/USD as both EUR/USD and GBP/USD are up against vital topside levels.

Brian Twomey

While I’m honored Fxstreet swamped my site lately with many views and assuming Spain views are fxstreet people, but of course this deserves skepticism as Fxstreet finally gives 2 shoots after 12 years of posts, trades, education, analysis and big profits.

When people of FXstreet caliber hit my site, they are looking for strategies and most popular is to steal my trades and commentary as their own. Many of these bigger named currency analyst people did this many times and over many years. The long list of currency analyst incompetence over years is legendary and Fxstreet is no different.

Contributors to Fxstreet were afforded the extra advantage for articles sent to social media sites such as twitter as most popular. This stopped 2 weeks ago. Articles are now contained within the Fxstreet site. If the article is acceptable, contributors receive front page status and if not accepted then articles hit the Dungeon.

Contributors were dumped in favor of paid Fxstreet writers and banks. Those articles represent the only analysis and commentary sent to twitter and other social media sites.

General views from Fxstreet were in the vicinity of 1000 – 1500 per article and I have the data to back up claims here. Then came investing dot com. They were good for another 1000 to 1500 views per article. Over the years, views ranged from 2500 to 5000 weekly and more for big events.

Problem here is also investing dot com. Mention the word correlation in an article or write something remotely close to sophistication then the article receives rejection. In the past 2 months or so, I had about 4 and 5 rejections.

The good about Fxstreet is they allow contributors to write freely. I always posted my research over the years for example because I had to go behind the currency analyst claims or to learn a particular concept.

Trust these words. The analysts and market writers are far more wrong than right. They truly don’t know what they say or do. I offered to assist many. I’ll be right over. They never came so hardened in the ways of wrong.

So I’m out of gas as Fxstreet views died a horrible death and I never had an interest in investing dot com, especially today as they now edit articles. Trust this also. They aren’t very good at the English >

Then came the promises over years from Peter and Tommy. I’m going to the trading desk and everywhere else. The Thailand Flyers, the Economist position. Here’s joe blow the $100 million a year Asia money Manager.

We profited what? 15,000, 20,000 pips in the past 6 months. Is this worth anything. Obviously not nor are subscribers coming.

So how to proceed is the overall question. Obviously we drop Fxstreet and no interest in investing dot com. Nobody else worth a dam exist anymore, not that fxstreet was so terrific but I began with them 12 years ago.

If views remain, I will maintain posts especially as I have much more on the BOJ, strategies and a long list of topics and trades. If views die then I’m through dealing.

How many of the 1000’s are loyal or look for us for trade assistance. Very few to be honest. Most wander the world looking for profits from the flavor of the day. The traders are as screwed up as the incompetent analysts and trade services.

Current subscribers reman as I take care of subscribers to the best I can for continuous profits.

And so we see what happens. As they say in Barceloonie Lo que sera sera

Brian Twomey

EUR/USD target at 1.1044 complete from entry at Anywhere. For May and June, EUR/USD traded at 1.0600’s. The pen, paper and calculator will always remain the most powerful, accurate and profitable trading tool. No computer nor the Algo BS can beat a calculator.

EUR/USD trades 1.0948 to 1.1120 and 1.1120 to 1.1349. For next week, EUR/USD hurdles are located at 1.1176 and 1.1180. EUR/USD must clear 1.1180 to target next 1.1240. And every 30 pips to 1.1360 as most powerful average.

Current EUR/USD trades Richter Scale overbought from 1.0800’s. Break at 1.1120 targets 1.1062, 1.1005 and 1.0976. A further rise for EUR/USD is stopped by 1.0800.
DXY broke lower to 100.00’s from its 5 week range at 102.00’s to 103.00;s. DXY’s new range trades from 100.00’s to 102.00’s.

GBP/USD next line above is located at 1.3031 and 1.3072 to target next 1.3195. GBP/USD trades in an overall range from 1.2867 to 1.3252. Current GBP/USD at 1.3000’s trades massive overbought from 1.2500’s and 1.2600’s. Shorts target 1.2949, 1.2908 and 1.2898. GBP/USD move lower is a correction due to overbought.

USD/JPY last week: Break at 140.00’s targets 138.08. USD/JPY dead stopped at 138.06. USD/JPY larger range is located from 138.09 to 131.61. Next target is found at 136.76. Only a break above 139.69 delays USD/JPY’s impending downfall.

USD/JPY and BOJ

True to form, the BOJ released Producer Prices yesterday. Current June Producer Prices sit at -0.2 from May at -0.7. The Export side to PPI is just fine and Exports beat Imports.

Most vital to BOJ is no intervention and no imperative for Ueda to change one iota of policy. The timing for Ueda’s arrival was godsend perfect as the BOJ completely overhauled policies and economic releases. Nothing exists for UEDA to do except sit back and watch other central banks screw up their economies.

Most important is the big mouths at the BOJ disappeared and USD/JPY will achieve another 1000 pips by screw ups at the FED but not from the BOJ side.

EUR/AUD targets 1.6189 and 1.6056 while GBP/AUD targets 1.8676 and 1.8626 to start.
GBP/CAD trades 1.6692 to 1.7253. At current 1.7100’s and deeply overbought, lower requires a break at 1.7096 to ensure target at 1.6998. Watch for shorts at 1.7153 as the next vital line above current price.

AUD/USD trades 0.6701 to 0.6902 and overbought from 0.6700’s yet oversold from 0.6900’s.

NZD/USD trades 0.6199 to 0.6193. Above 0.6393 targets 0.6421.

Both AUD/USD and NZD/USD longer term trade deeply oversold. A fairly normal price for AUD/USD is break 0.6902 and 0.7055. Failure to break leaves AUD/USD in continuous oversold circumstances.

NZD/USD above 0.6393 trades 0.6393 to 0.6558. Above 0.6558 trades fairly normal and 0.6558 matches to AUD/USD at 0.7055. Failure to break 0.6393 and 0.6558 then NZD/USD trades in permanent oversold conditions.

GBP/NZD traded lows at 2.0481 from 2.0900’s. Next targets 2.0147, 1.9948 and 1.9916. Add GBP/NZD to the 15,000 and 20,000 pips banked since December / January. And on to 50,000.

USD/CAD trades deeply oversold and must break 1.3353 to target 1.3400’s.

Brian Twomey

EUR/USD target as reported for many weeks at 1.1044 traded to 1.1026. EUR/USD above 1.0943 allowed a higher EUR/USD and near target completion. EUR/USD currently trades 1.0943 to 1.1118. Next levels 1.1000, 1.1058 and 1.1116. Note EUR/USD 1.1116 and 1.1118. EUR/USD 1.1100’s represent tough to break levels.

Overall EUR/USD vital levels: 1.0853, 1.0943, 1.1118, 1.1348 and 1.1595. Only minor changes to levels will be seen over next months.

GBP/USD Vital levels for next months: 1.2568, 1.2640, 1.2744, 1.2863, 1.2892, 1.3195 and 1.3250

USD/JPY is not only oversold but big break at 140.09 is close. Break of 140.09 targets next 139.25, 138.43 and 136.77.

Long term targets for USD/JPY and JPY cross pairs remain and targets held since December / January.

The BOJ Producer Price Index reported June 12 and is expected to report again tomorrow on July 12. The intervention definitive answer is found in tomorrow’s release. The revelation as suspected is no intervention. The Japanese were successful by jawboning USD/JPY a few extra pips lower.

Years ago during the days of regular BOJ interventions, jawboning was always number 1 priority then came intervention.

And no intervention because Trade will report exports in Japan’s favor. We will also see no words from the Japanese to USD/JPY levels.

From the Tankan Survey, the 2 most vital export currencies and most important markets for Japan are USD/JPY and EUR/JPY. Forget the Regional stuff reported as USD/JPY and EUR/JPY and Europe far outpace trade than Japan Trade with China or regional nations.

JPY Correlations

USD/JPY Vs EUR/USD at last report ran Correlations at +90%. Correlation at such high levels can’t hold and explains USD/JPY’s move rather than the big mouth Japanese. Today’s Correlations run USD/JPY Vs EUR/USD at +77% and 20 point difference. More to go which means USD/JPY must continue to separate from EUR/USD.

USD/JPY vs EUR/JPY +98% and EUR/USD Vs EUR/JPY at +85%. Correlations reveal the JPY cross pair move is just getting started and has more moves to go.
Same story to GBP/JPY as USD/JPY Vs GBP/JPY Correlate at +99% and GBP/USD correlates to GBP/JPY at +98. The GBP/JPY move has barely began its downward trajectory. Correlations alone informs to not only current price situations but what’s ahead.

Brian Twomey