Tianzuida ON TRADING

This paper is 28 pages and rejects MMT totally. MMT is a Keynesian model. The very basics of Keynes is government controls the money supply. Its an activist approach as governments add money to deficits and rescind money when in surplus. This assumes government is efficient and timely enough to act properly. Taxes control Inflation and an extra added measure to assume efficiency.

The best of Keynes is to know the intersection and balance of money supplies and interest rates such as the 1930’s John Hicks model highlighted in Inside the Currency Market.

MMT is viewed and rejected from a Monetary and Fiscal policy perspective however Mosler in Soft Economics and interviews states his acumen to view MMT is for profits to bond trades. And he appears to have earned fortunes by trades.

Another brand new paper was just released in regards to MMT but I don’t know yet how to gain access.

Brian Twomey

EUR/USD’s 1.0961 target as reported September when EUR bottomed at 1.0400’s achieved Tuesday as EUR/USD traded 1.0964. The trade +500 pips. GBP/USD target at 1.2661 reported September at GBP 1.2000’s bottom traded to 1.2615 for +600 pips. Total +1100 pips.

The EUR/USD and GBP/USD trade duration was 7 weeks and bottoms provided forward guidance and trade alerts to many currency pairs and many markets.
While EUR/USD and GBP/USD bottomed, AUD/USD and NZD/USD bottomed at the 4 week interval. EUR/USD and GBP/USD began immediately to trend higher.

GBP/CAD and EUR/CAD bottomed 8 weeks ago and began an 8 week and 900 pip trend higher.

While GBP/CAD and EUR/CAD simultaneously bottomed at 8 weeks, AUD/CAD bottomed at 6 weeks and NZD/CAD at 5 weeks. GBP/CAD and EUR/CAD failed to wait for AUD/CAD and NZD/CAD as both traded 400 pips higher 2 weeks later.

JPY cross pairs GBP/JPY, EUR/JPY, CHF/JPY, AUD/JPY, and CAD/JPY bottomed 7 weeks ago. GBP/JPY, EUR/JPY and CHF/JPY were the big winners in all markets by trading 1000 pips from 178.00 to 188.00 and 154.00 to 164.00 and 160.00 to 170.00.

NZD/JPY bottomed at 4 weeks to match NZD/USD. NZD/JPY and AUD/JPY traded 500 pips higher and 300 pips for CAD/JPY.

USD/CAD bottomed 7 weeks ago at 1.3500’s and traded an erratic 300 pips to 1.3800’s while USD/CHF and topped 7 weeks ago and traded 400 pips lower.

While EUR/USD and GBP/USD bottomed, SPX bottomed 4 weeks ago and traded 400 points higher and XAU/USD from the bottom 7 weeks ago traded 200 points.

DXY dropped 400 pips from 7 weeks ago while the 10 year yield fell 0.66 from 4 weeks ago and 0.45 for the 2 year yield. USD/JPY followed DXY at 400 pips.

WTI dropped 19 points from 8 weeks ago to match GBP/CAD and EUR/CAD.

Overall markets to all financial instruments began coordinated trends at the 5 week point while 2 and 3 week intervals belonged to early warning currencies as GBP/CAD and EUR/CAD, GBP/USD and EUR/USD and JPY cross pairs.

Currencies were the only authority to when bottoms and tops trade as well as when coordinated trends begin.

Weekly trades answers normal Vs non normal movements, trends Vs Ranges, range compression Vs Expansion.

The Week

Best market trades over next weeks are short GBP/JPY, EUR/JPY and CHF/JPY. Then GBP/CAD and EUR/CAD.

Overbought EUR/USD trades 1.0981 to 1.0875. Below 1.0875 trades 1.0803 to 1.0875. Expected is the break at 1.0875.

GBP/USD trades 1.2621 and 1.2683 to 1.2560 and 1.2530. Break 1,2560 trades 1.2439 to 1.2560.

GBP/JPY targets 186.63 and 162.61 for EUR/JPY.

AUD/USD longs re safe above 0.6502 and 0.6004 for NZD/USD.

Overall lower for non USD currencies to relieve overbought.

EUR/USD next giant break is located at 1.1052 and GBP/USD 1.2781.
All JPY cross pairs trade massive overbought to begin the week.

EUR/CAD long term targets 1.4400 and GBP/CAD for the week targets 1.7000’s easily.
GBP/NZD higher must cross above 2.0719 and 1.7993 for EUR/NZD.

USD/CHF week 2 again trades deeply oversold while 1.3642 decides longs and shorts for USD/CAD.

USD/JPY trades 150.44 to 149.07.
EUR/AUD targets 1.6543 then longer term at 1.6307.

CAD/CHF again trades oversold while remaining CHF cross pairs sit at vital long / short levels. For CHF cross pairs, its a 50 50 short at market opening to guess longs or shorts.

USD/EM

USD/BRL again trades oversold and matches oversold to USD/DKK, USD/MXN, USD/PHP, USD/RON, USD/SGD,
ZAR is an untradeable currency as USD/ZAR or EUR/ZAR.

Brian Twomey

Current USD/JPY 149.56 Vs EUR/CAD 1.4933. Correlations run +51%, A T Score at 1.35 and a 155 pip range separates USD/JPY and EUR/CAD. EUR/CAD trades above its most vital break at 1.4733 while USD/JPY trades above its most vital line at 147.68.

By the eyeball view, the cross over trade is upon us for longs and shorts. Since the start of day trades today at 2:30 AM EST, USD/JPY traded lows 149.32 to 149.65 highs or 33 pips. EUR/CAD traded highs at 149.47 to 149.24 or 23 pips.

USD/JPY 155 pip part of the range is located from 150.48 – 149.08 while EUR/CAD is located from 1.4964 to 1.4810.

Day trades only trade a tiny fraction of overall ranges and by central bank design since the 2016 interest rate changes. Although when larger ranges are in compression mode, day trade breakouts are seen.

The 155 pips break down to day trade pips as 1/2 = 77.5, 38.75, 19.37, 9.68. For day trades, rather than factor exact pips, ranges are factored as 10 pip intervals.

Day trade for crossover intervals begin at 10 pips. Today isn’t the best day for demonstration purposes but the 10 pip intervals as well as the overall day trade ranges separating EUR/CAD and USD/JPY rarely changes. Its written in Mathematical stone as all market prices and currencies.

On the horizon for further day trade crossover trades are EUR/USD Vs CAD/JPY, CHF/JPY 159.36 Vs EUR/AUD 1.6614, AUD/CAD 0.8987 Vs USD/CHF 0.8830.

A crossover trade must occur with 2 opposite currencies for longs and shorts. Note, EUR/CAD Vs USD/JPY = EUR Vs USD.

EUR/CAD Upside today = 1.4952, 1.4961, 1.4970, 1.4980, 1.4989, 1.4999, 1.5008, 1.5018

USD/JPY upside today = 149.55, 149.64, 149.73, 149.83, 150.02, 150.11, 150.21

EUR/CAD Bottoms = 1.4868 1.4877, 1.4886, 1.4905, 1.4933

USD/JPY Bottoms = 148.71, 148.80, 148.89, 149.09, 149.36

Brian Twomey

Recall the Uchida speech from the BOJ on August 2. The BOJ is not in talks or consideration to change interest rates nor switch to positive rates.

Is it possible to assess and report a USD/JPY 200 pip move this week completely changes an entire central bank policy program in place since 2016. As Uchida stated, if interest rates ever moved then only by 10 points and not in positive territory.

Ueda Man backed Uchida claims when he assumed head position in April 2023 at the BOJ.

Historic BOJ since the 1990’s moved interest rates by 10 points.

BOJ interest rates in 2013 traded 1.1 positive then a gradual change occurred to trade negative at 0.9 in 2016. The difference was 0.2 or 2 interest rate drops by 10 points each in 10 years. Interest rates remained at 0.9 for the past 7 years. A possible change means a drop by 10 points to 0.8 as highlighted by Uchida and again reiterated by Ueda Man.

USD/JPY is a trade document as the BOJ regulates and closely monitors daily USD/JPY levels by Imports and Exports. The BOJ concern is overseas and Western economies are committing economic suicide. This means Europe and America won’t purchases Japanese vehicles or Electronics. USD/JPY will then drop while the BOJ contemplates intervention to prevent the fall. USD/JPY then enters a period of massive price struggles.

The BOJ over many months engaged in less and less JGB purchases as no need exists against a positive sloping yield curve.

BOJ trade figures are running near to perfection.

As to hawkish or dovish. Not even Jesus Christ understands what this statement means nor how to profit if they had an answer.

Next Week

From FX Weekly, USD/JPY and JPY cross pairs resulted in the best trades this week. CAD/JPY broke 108.43 and traded to 107.22 lows, USD/JPY broke 148.14 to traded 147.15.

USD/JPY long term targets hold at 146.07, 138.01, 133.26 and 129.72.

USD/JPY next week’s big break for lower is 147.68. We’re short next week in the middle 150.00’s to target low 148.00’s.

GBP/JPY and EUR/JPY shorts next week from low 187.00’s targets 184.00’s and EUR/JPY targets 160.00’s.

Both GBP/JPY and EUR/JPY trade overbought from current prices and shorts are the only trades. GBP/JPY and EUR/JPY remain best weekly trades.

CAD/JPY trades neutral to oversold and 108.20 sits as big break to target 107.53 easily. We’re short CAD/JPY as all JPY cross pairs but CAD/JPY must contend with a listless, no trade direction USD/CAD.

AUD/JPY and NZD/JPY trade massive overbought. No such concept as long exists in current AUD/JPY and NZD/JPY prices.

JPY cross pairs trade overbought to include CHF/JPY and to trade with a target at 167.84 for next week.

EUR/USD trades am 189 pip range next week at 1.0789 to 1.0873. Above 1.0873, EUR/USD becomes overbought at low 1.0900’s. Shorts again targets 1.0831.

EUR/USD is encountering range problems.

GBP/USD is approaching a big line at 1.2556 and ranges from 1.2556 to 1.2414. GBP/USD is the preferred trade Vs EUR/USD.

AUD/USD trades in wide ranges from 0.6492 and 0.6483 to 0.6754. We’re short next week from 0.6580’s to target low 0.6500’s.

NZD/USD also trades wide ranges from0.5979 and 0.5995 to 0.6251.

The weekly perspective is the anchor currencies are entering short range territory and requires a breakout but current prices won’t allow a big move.

CHF. Short ranges to anchor currencies translates as complete dead ranges for CHF cross pairs. CAD/CHF is again the last man standing as it trades massive oversold.
USD/CHF trades deeply oversold and its USD/CHF to drive CHF cross pairs.

Best and only CHF trades are located within USD/CHF and CAD/CHF.

GBP/CAD and EUR/CAD continue to trade overbought. GBP/CAD targets 1.7055 and EUR/CAD 1.4835.

GBP/NZD target last week traded to 2.0670 on a break at 2.0721. GBP/NZD and EUR/NZD trade oversold above 2.0714 and 1.7999.

Brian Twomey

Inflation began climbing February to March 2021 from 1.7 to 2.6. Inflation then began a steady rise every month from 2.6 to 8.5 in March 2022. Powell embarked on the first 25 point interest rate rise March 2022 and a total of 75 points for March. The total today is 500 points.

3 months later, Inflation peaked at 9.1 and began a slow descent to 3.2 just 16 months later to 3.2. Overall, Inflation remained above 2% for 32 months and counting.

The 3 month yield crossed above the 10 year around August 2022 when Inflation peaked at 9.1. A late, late signal although both were on the rise since December 2022 when Inflation achieved 7.0.

The M2 Money supply crossed below Inflation and above M1 in April 2022 when Inflation hit 8.3. The M2 money supply remained above M1 since April 2022. Another very late signal. The data so far goes to April 2022.

Inflation topped at 9.1 from 1.7 and a rise of 7.4 in 16 months. From 9.1 to 3.2 and 5.9 points, the drop duration was 16 months. A 16 month rise Vs 16 month drop and 500 Fed Funds points. The Fed’s 500 points allowed 67 points for every 0.01 move in Inflation or 1%.

Fed Funds upon Powell’s first raise March 2022 ranged from 0. 00 to 0.25.

Viewed from the Import side to incorporate the Supply side equation, Powell bought himself 5 points for 500 Fed Funds points or 84 Fed Funds points for a 0.01 move or 1%.

Recall, Imports = Interest rates, Inflation, Exchange Rates.

DXY rose from 96.63 to 114.78 March 2022 to September 2022 or 1815 points. March 2022, Inflation achieved 8.3 DXY was concerned regarding interest rate moves rather than Inflation’s massive move higher.

By September 2022, Fed Funds raised 300 points, Inflation rose 0.6, 60 points or 60%. DXY Rose 1815 or 110.00% or 1.1.

300 points or 0.3, 30% caused Inflation to rise by 0.6 or 60%. Inflation rose 2 X to fed funds.

Powell is fighting Inflation from strictly the Supply side rather than address the problem to the demand side as Money supply and GDP. But interest rates at 0.00 to 0.25, what was Powell’s move. Lower interest rates.

Powell sent Imports skyrocketing from again the supply side. Supply was fought with Supply. and DXY higher assisted Imports Rise.

The Fed’s job is maintain and manage Fed Funds in a 25 ish point range and completed by money added and subtracted to the economic system

Powell is now stuck with skyrocket Imports, overbought DXY, Fed Funds and Inflation. Lower interest rates rectifies Money Supply higher and loose, GDP higher and Inflation will drop.

Brian Twomey

Currency markets this week are defined as severely oversold USD and massive overbought non USD as EUR, GBP, AUD and NZD. Oversold USD begins with USD/JPY and USD/CHF. USD/CAD range trades this week and travels higher along with USD but lacks any conception to oversold or overbought.

As written to EM targets on these pages since 2015, USD oversold applies to USD/ EM currencies as USD/BRL, USD/DKK, USD/HUF, USD/RON, USD/PHP, USD/SGD, USD/THB, USD/ZAR.

EM trades week to week are highly selective as uniformity rarely exists unless an overall big move was seen in markets such as USD Inflation. Note missing from the list are favored trades as USD/CZK and USD/PLN.

Absent Currencies as USD/MXN, USD/ INR, USD/SEK, USD/ NOK, USD/PLN share an equal oversold reading with EUR counterparts as EUR/MXN, EUR/INR, EUR/SEK, EUR/NOK. EUR/PLN. No trade exists for all currencies because all lack a direction.

Most vital is USD trades oversold across the board and most informative is oversold from low range currencies as USD/PHP, USD/SGD and USD/THB. All rarely trade deeply oversold or overbought but rather trade normal dead ranges.

The Week

Trades this week are one way as short EUR and long USD. A significant average break is not seen this week as the purpose of the week is to relieve oversold and overbought conditions. GBP/USD for example is safe above 1.2368, AUD/USD 0.6446 while USD/JPY is long from oversold 148.14.

EUR/USD and EUR cross pairs begin the week overbought with the exception of EUR/AUD. EUR/USD big break for lower is located at 1.0867 to place EUR/USD in a 122 pip range from 1.0867 to 1.0745. Above, EUR/USD meets a big line at 1.0976.

The EUR/USD move lower is a correction to relieve current overbought status. EUR/USD longs are safe above 1.0745, 1.0678, 1.0648 and 1.0645. Lower averages will continue rising alongside a higher EUR/USD price.

Best trades for the week are JPY cross pairs beginning with GBP/JPY, EUR/JPY and AUD/JPY. CHF/JPY also begins the week overbought. Lower for CAD/JPY must break 108.43 and NZD/JPY 88.39.

Next best weekly trades are GBP/CAD, EUR/CAD, AUD/CAD and NZD/CAD as overbought exists across the board. GBP/CAD targets easily 1.6968, EUR/CAD 1.4789, AUD/CAD 0.8879 and NZD/CAD 0.8176.

EUR/NZD and AUD/NZD trade overbought while GBP/NZD trades to 2.0670 on a break at 2.0721. AUD/NZD remains a severely problem currency pairs and is not recommended as a trade.

GBP/USD and GBP cross pairs trade fairly neutral to overbought. Best trades are GBP/JPY and GBP/CAD while GBP/USD targets 1.2393 then the resolution of 1.2368.

GBP/USD trades from 1.2551 to 1.2368. GBP/USD’s overall bottom is located at 1.2298.

GBP/JPY targets back to 184.00’s and EUR/JPY targets 162.00’s and 161.00’s.

USD/CHF trades deeply oversold while CAD/CHF is the only CHF cross pair to qualify as oversold.

USD/JPY requires a break at 148.14 to target 146.07, 138.01, 133.26 and 129.72. For the week, USD/JPY targets 148.97.

USD/CAD same old story, up, down and stuck in the middle without price progress. WTI dropped straight down from 82 to 74 over the past 6 weeks and USD/CAD roamed around without purpose. OIL and USD/CAD correlations doesn’t work.

Brian Twomey

In process to understand Modern Monetary Theory after reading many papers and watching videos. Not sure I agree totally but I don’t know all the finer details. Certain aspects are really good and valid. Much work involved because we must check their work. None of these market people can be trusted. This is early stages.

Stephanie Bell or better known today as Stephanie Kelton and Warren Mosler are the Kings and Queens of MMT. Stephanie Kelton wrote a great paper 20 years ago. I just started Warren Mosler Soft Currency Economics. Auerbach 1963 is next as well as Poole 1987.

Great point today was the interest rate supports Inflation. Higher interest rates = higher Inflation. This we know from the Import / Export Model. To raise interest rates to lower Inflation actually supports higher Inflation.

Another point was Taxes. Higher taxes = higher unemployment rates. Lower taxes = raises Employment levels. Employment was placed on the Export side while Taxes may add to Imports.

As I’m going through MMT, validations to the Import/ Export model materializes as many central bank papers haven’t assisted.

I’m not a Keynesian nor subscribe to Deficit spending. I’m an Austrian and agree with certain aspects to the Swedish school of Economics.

MMT

Monetary Policy = Treasury maintains Fed Funds rate in Target range. Current 5.25 to 5.50. Based on day’s closing balance by Fed.

Fiscal Policy = Supply of Money. Bond sales and taxes can’t finance government spending. Destroys money.

Reserve effects to treasury operations = Newly created money finances government.

Reserve Equation for required reserves = Bank total deposits X Reserve Ratio.

Pay government = Reserves decline.

Government spending = Reserve Increase.

Issue Bonds = Drain Reserves.

Taxes = Loss of reserves.

Monetary Policy is about money reserves as money flows in and out of the Treasury, Fed and 12 member Fed Banks.

Brian Twomey

Brian Twomey

DXY Inflation 0.1, CHF Inflation = No change, EUR Inflation no change. EUR GDP = 0.1, DXY GDP 0.7. DXY Inflation is now oversold and trades higher in the next 6 week cycle. Expect higher and lower for Inflation and GDP at 0.1 and 0.2.

Inflation at 0.1 on the day experienced EUR/USD moves at 195 pips or 0.01 and a 1% move. From 10% Inflation, EUR/USD traded 1%.

Inflation is an interest rate and once released, the interest rate to trade for the day is known. Inflation lacks any significant meaning except as an interest rate. The causes to Inflation is tops on the meaningless scale as Inflation only trades 0.1 and 0.2.

Inflation only dropped 0.1 and 0.2 for the past 32 months while above 2%. Inflation target at 2% in 2025 will only offer 0.1 and 0.2. For GDP and Inflation, all we’ve seen is 0.1 and 0.2 and a rare off balance forecast.

If all have the feeling true and correct Analysis died long ago, this is a certainty. This is the age of 90% traders use charts. This is where it all began decades ago.

The world of trading is at the beginning stages. How can analysis possibly come from the beginning or to ascribe successful trading consistently.

Yet 80% of Retail traders continue to lose and no changes over decades. This is exactly what supposed to happen. Traders are led to the slaughter.

The previous 6 week cycle ends today with DXY Imports and Exports and the Economic story will remain the same across all central banks except the BOJ and SNB.

6 Week New Cycle Vs Maintenance Periods

The 6 week news cycle is the same as the 35 day Bank Maintenance period. The 7 day Maintenance Period is actually 14 calendar days and begins on Thursday and ends on the 2nd Wednesday.

The 7 day Maintenance period describes the 2 week cycle and falls in line with most vital Inflation and GDP releases for all central banks at the beginning of the cycle. This is where best trades are found and best movements due to bank money lining into high and low cash money channels.

Next Week

Currency markets and a vast majority of currency pairs trade mid range as current prices are fairly settled. Best trades next week are JPY cross pairs as GBP/JPY, CAD/JPY and EUR/JPY.

CHF/JPY includes to JPY cross pairs as CHF/JPY also trades massive overbought.
EUR/USD 1.0963 target traded 1.0887. Lows 6 weeks ago achieved 1.0400’s. The traders job was entry anywhere, walk away and all have +400 pips.

GBP/USD target at 1.2661 achieved highs at 1.2505 and lows 6 weeks ago at 1.2000’s. All have 500 pips for doing nothing.

EUR/USD and GBP/USD targets remain open and will complete.

EUR/USD trades 1.0864 to 1.0719 and currently overbought. We’re short for next week for any price at 1.0800’s. Overall, longs remain as EUR/USD higher has a long way to travel. Above 1.0864 trades 1.0864 to 1.1054.

GBP/USD trades deeply oversold at 1.2300’s and trades a range from 1.2343 to 1.2551.

AUD/USD trades oversold in a wide range from 0.6447 to 0.6753.

Lower for EUR/USD, GBP/USD and AUD/USD must break 1.0719, 1.2343 and 0.6447.
EUR/AUD traded 139 pips this week and targets remain 1.6400’s and 1.6200’s. EUR/AUD will break 1.6627 then 1.6400’s target completes.

GBP/AUD traded 300 pips this week to follow its counterparts GBP/NZD and EUR/NZD.
GBP/AUD last week target, 1.9036, lows traded 1.9043. Next week, GBP/AUD trades 1.9146 to 1.9238.

NZD/USD trades 0.5958 to 0.6030. NZD/USD trades to follow the market.

USD/CHF trades severely oversold while CAD/CHF adds to the oversold reading to CHF cross pairs.

Overbought to GBP/CAD and EUR/CAD.

USD/JPY 151.66 to 149.92 range.

EUR/NZD and GBP/NZD contain a long way to drop. Oversold USD for next week translates to short highs.

Brian Twomey

This article is a follow up to titled Reserve Ratios and Excess Reserves Interest a long article written in 2017. Much was written on Maintenance periods. I wrote a long article for the ECB’s Money Market Institute in 2012 on Maintenance Periods and Reserve Ratios.

Interesting aspect is not much changed since 2012 and not much changed since the Garn St Germain act of 1982.

Note how the 6 week Economic releases align to Maintenance periods. The purpose to the following is MMT. Modern Monetary Theory. Its more than a theory and well practiced.

Bank Maintenance periods = 35 days.

7 Day Maintenance Periods = 14 Calendar days. Begins Thursday and ends the 2nd Wednesday. Believe this explains the 2 week cycle.

Interest credited = 1 day after the maintenance period.

Interest Paid as primary credit = 5%, secondary = 5.50.

Today’s reserve balance rate 5.40

Interest on Required Reserves = 4.9%, factored as 4.9 X total bank balance.

Reserve Requirement Exemption = 361.1 million.

Low = 691.7.

Fed Funds rate = 5.33.

Fed Funds rate held at 5.33 since last raise through daily money channels. Ensures Fed Funds won’t trade to zero.

Purchase and sale of Bonds = Debit and Credit to Treasury and Fed Accounts. This holds Fed Funds and money supply constant.

Brian Twomey

Check this headline from yet another incompetent currency analyst. As usual, I’m not holding back. This time from Black Bull Markets: Time to watch GBP/JPY for intervention. But this example serves to all currency analysts and most market people.

Correct: The BOJ intervenes only to adjust misaligned imports and exports. The largest markets are the United States and Europe and USD/JPY and EUR/JPY are most vital.

Since 1991, the BOJ never intervened on GBP/JPY. GBP/JPY only began trading on the Japanese Financial Futures market in 2005. Traded contracts are very low.

Japan trade with the UK = 826,574 Exports to UK Imports 516,714. The numbers are extremely low in comparison to Imports and Exports in relation to the United States and Europe. Japan traded more with Mexico than the UK.

The only JPY cross pair the BOJ intervened on was EUR/JPY and last was May 9, 2003. From 1991 to 2023, the BOJ intervened on EUR/JPY 18 times. The BOJ intervened on USD/JPY 361 times from 1991 to 2023.

I know this Market guy. He owns a trading platform and he’s been around for 40+ years. He informs Retail traders remain losers at 80%. Nothing changed over past decades.

All we see is the same old chart garbage, the same old tired commentary and the same old losing trades. The websites promote this stuff. Investing dot com turned down my last 3 weekly commentaries. I send just to bother them.

One would think the currency brokers would wake up from decades of comatose and assist accounts to become profitable. FX dumb street is just as guilty but they don’t want a smart trader or smart commentary otherwise they believe, views would disappear.

But its all a churn service. For every losing trader, 5 more are ready to take their place. No shortage of people to sign up and lose their money.

I’m in preparation today for tomorrow’s post. I don’t see a need to post more than twice a week as my posts go to the FX Dumb street Dungeon as they only promote their own incompetent traders.

Brian Twomey

Inflation released this week is expected a difference of 0.1 and 0.2. The written analysis over past months was correct and here’s why.

Since Inflation highs in June 2022 at 9.1 and 15 months later to current 3.7, each Inflation release averaged 0.36. The actual drop for each Inflation release was 0.1 and 0.2 and failed to meet or exceed the 0.36 average.

The larger range to Inflation at 1.95 factored to 0.10 = 0.2. The actual release at 0.1 and 0.2 is mathematically correct but more so at 0.1. Because a release at 0.2 = 0.39 and bumps against the 0.36 average.

A lower Inflation rate at 0.1 drops the range number from 1.95 to 1.75 or higher to 2.15. The average at 0.36 changes slightly but Inflation remains released at 0.1 and 0.2 for a very long period of time.

Inflation at current 3.7 Vs the 2.0 target or 1.7 remains a far distance. The target assumes 0.1 released at the next 17 Inflation releases and continually drops. The next 17 Inflation releases factors to 102 announcements at every 6 weeks. The target at 2.0 then forecasts to achieve March 2025 and in line with the RBA’s Inflation forecast to Australia CPI and the BOC in Canada.

Inflation at 3.7 trades oversold and another drop at 0.1 and 0.2 translates to a deeper oversold level which means, a current drop will reveal higher levels at the next 6 week release. Most vital points over the next months are 5.47 and 6.4. Both are vital points to contain Inflation at lower levels.

Inflation at 3.7 and expected to trade higher reveals GDP is slated for an easy 2% fall while Interest rates and Oil will trade higher. Oil accounts for 0.4 or 40% to central bank Inflation calculations.. In Japan, 0.2 or 20% accounts for BOJ Inflation.

Economies will remain deeply depressed. Rather than a restrictive Monetary Policy, the plan to lower interest rates and raise money supplies would skyrocket GDP and economies would prosper again. Powell requires a loose money supply rather than restrictive

The Week

Best and easiest trades over next weeks are found in wide rangers GBP/NZD, EUR/NZD, GBP/AUD and EUR/AUD. Best anchor pairs to trade are GBP/USD and AUD/USD. USD/JPY and JPY cross pairs GBP/JPY and EUR/JPY continue overall as most favored trades and best profits.

EUR/USD and EUR cross pairs is the best trade category for the week. EUR/USD is fine however EUR cross pairs begin the week overbought. EUR cross pairs refers to EUR/JPY, EUR/CAD, EUR/NZD, EUR/AUD and EUR/GBP. The EUR/CHF resolution at 0.9620 determines longs and shorts for the week.

EUR/USD and EUR cross pairs is this week’s drivers to currency markets and to influence prices and direction to Gold, stock indices and yields. GBP/USD and GBP cross pairs will follow rather than lead EUR/USD.

GBP/NZD and EUR/NZD

GBP/NZD targets 2.0596, 2.0280 and 2.0161. GBP/NZD must and will break below 2.0705 and 2.0701. For the week, GBP/NZD ranges from 2.0701 to 2.0819. The GBP/NZD trade strategy is short and short any highs.

EUR/NZD targets 1.7872, 1.7580, 1.7483 and 1.7428. EUR/NZD must and will break 1.7967 in order to achieve trade targets. EUR/NZD begins the week massive overbought with limited upside.

EUR/AUD and GBP/AUD

EUR/AUD opens this week severely overbought and targets 1.6483, 1.6274 and 1.6151. Trade strategy is short to target the break at 1.6594. No such concept as upside exists this week for EUR/AUD. The bare minimum and easy target for EUR/AUD is 1.6675.

GBP/AUD targets 1.9036, 1.8779, 1.8728 and 1.8658. GBP/AUD for the week trades 1.9244 to 1.9120. The required break for lower is 1.9120.

EUR/CAD and GBP/CAD

EUR/CAD opens the week deeply overbought and no upside exists. Typical EUR/CAD to target 100 ish pips lower at 1.4688 and 1.4645.

GBP/CAD ranges from 1.6835 and 1.6849 to 1.6959. GBP/CAD big line exists at 1.6894. GBP/CAD’s best target is located at 1.6713.

Overall, EUR/CAD and GBP/CAD are performing their natural functions to range as nothing exciting exists to target except 100 pips lower.

EUR/JPY and GBP/JPY

EUR/JPY again drives GBP/JPY and JPY cross pairs. EUR/JPY opens the week overbought and targets 160.50. No upside potential exists for EUR/JPY as shorts for the week is the only trade strategy.

GBP/JPY also begins the week overbought and targets lower 184.00’s. GBP/JPY overbought is the first within the last 3 weeks at oversold levels.

EUR/USD, GBP/USD, AUD/USD

EUR/USD for the week and long term trades oversold and targets the break at 1.0704 then 1.0792, 1.0873 and 1.0963. EUR/USD problem this week is overbought EUR cross pairs. Lower for EUR/USD presents a great opportunity for longs.

GBP/USD next target at 1.2294 then a big line break at 1.2335 to target 1.2457 and 1.2548.
GBP cross pairs trade neutral to open the week and in search of direction. EUR will provide the direction.

AUD/USD short and long term trades deeply oversold. Long is the only trade and only direction. This includes this week and long term. The overall target is 0.6505 and this is just the beginning to the significant upside potential for AUD. Look for middle 0.6400;s this week as targets.

USD/JPY

Short remains the strategy and constant weekly program until low 140.00’s trade. The downside potential for USD/JPY is enormous. USD/JPY short, medium and long term trades massive massive overbought. The target at 140.00’s is bare minimum. For the week, USD/JPY targets low 150.00’s.

USD/EM

USD/INR, SGD/MYR and USD/MXN trades overbought to begin the week while oversold applies to USD/CZK, USD/DKK, USD/MYR, USD/RON, USD/HUF.

Brian Twomey

A negative interest rate is a positive rate but presented on a negative scale. No difference exists between both a negative or positive number. Both are the exact same numbers. Today’s post was prompted by this statement from a market person, The BOJ will disregard negative interest rates and turn positive. BOJ interest rates are already positive but presented as negative rates.

The BOJ will not change the negative scale arrangement. To change the appearance of negative to positive would completely undermine the entire JGB yield curve, YCC and BOJ bond purchases and sales. Tona and Call rates would completely change as well as the new 2016 BOJ economic arrangements. The arrangements to the entire economic system is based on negative interest rates.

What levels USD/JPY would trade if a presentation change occurred is unknown but the Import and Export lines would surely undergo a radical metamorphosis.

As a sidebar, I’m working further with interest rate numbers and finding much easier and faster ways to factor trades. Much has changed since 2016 and further revamps to 2022.

BOJ. Only went 2 days as no need to travel further. Negative turned positive = 0.974. Positive = 0.973. No changes but only in the presentation.

Day 2. Negative turned positive = 0.973. Positive = 0.972. No changes but only in the presentation.

The BOJ set of interest rates is no different from any central bank as all the numbers are the exact same and perform the exact same operations to markets and Market trading on any financial instrument.

Danske Bank. Why didn’t USD/JPY drop last week. Because the BOJ stopped USD/JPY’s fall and they did it everyday last week by adjusting interest rates.

Never forget this concept to all central banks: the floor and ceiling to interest rates.

The ECB;s Eonia rate was negative then positive Ester was replaced. Eonia was the Floor to interest rates and EUR/USD. Upon the Ester Introduction, Ester became the interest rate top and top for EUR/USD.

Ester now trades miles above previous Eonia. So can the BOJ go positive. No way.

Brian Twomey

USDJPY Vs DXY 128.60 to 155.89

USDJPY V EURUSD 129.01 Vs 155.81

USDJPY V GBPUSD 136.76 Vs 1.5426

USDJPY Vs AUDUSD 107.51 Vs 160.11

USDJPY V USDCAD 144.74 Vs 152.66

USD/JPY Vs USD/CHF 120.82 Vs 157.43

USD/JPY Vs NZD/USD 105.13 Vs 160.57

USD/JPY Vs GBP/CAD 160.04

USD/JPY Vs EUR/CAD 149.31 Vs 151.73

USD/JPY Vs EUR/AUD 159.43

USD/JPY Vs EUR/GBP 119.30 Vs 157.74.

USD/JPY Vs EUR/CHF = 123.81 to 156.84

USD/JPY Vs GBP/CHF 130.84 to 155.43

USD/JPY as covered in previous posts lifted from 128.00’s and historically from a terrible location based on my model review. USD/JPY from 128.00’s and now 151.00’s traded 2300 pips or 1 full currency cycle of 2500 pips.

USD/JPY trades massive overbought Vs EUR/USD, GBP/USD, USD/CAD, EUR/CAD, EUR/GBP.

USD/JPY trades overbought from CHF cross pairs. USD/JPY trades overbought to a vast majority of our 28 currency pairs.

USD/JPY contains a long way to travel lower. First big break at 147.66 targets 144.00’s for the shortest term.

Brian Twomey

USD/JPY achieved highs October 31 at 151.72 and BOJ failed to intervene. As informed from previous posts, the BOJ won’t intervene. To date, the BOJ not only failed to intervene but remains dead silent to USD/JPY levels. And at the most important end of month trade time. The BOJ message is trade is just fine as well as BOJ levels.

Ueda Man spoke November 6 and reiterated information from the BOJ’s latest Economic Outlook. The job of Central bank members and chairpersons is to fly around the respesctive nation delivering the lastest Economic reports previously published.

News and new information is never found nor is the Economic information able to move markets.

If the latest Economic report was read then no need exists to listen to central bank speeches.

For the first 20 days of October, Imports = 6.691, 888 Vs Exports 5, 797, 441 or a difference of 894, 447. Does this look even remotely close to intervention.

While the trade crowds were again wrong to intervention, USD/JPY Imports and Exports from October 22 to 28 were completed at 149.03.

From 29th to November 4, trade was completed at 149.70. Current trade from November 5 to 11th, trade was done at 149.99. Last, November 12 to 18 = trade at 150.26.

Imports and Exports were completed fairly close to USD/JPY market rates. No intervention.

While GDP, Interest rates and Inflation are important Economic releases, Import and Export lines nullifies the requirement to focus on GDP, interest rates and Inflation as GDP, interest rates and Inflation direction and positions are known miles in advance.

If Import and Export lines are known, exclude the reading and focus on Monetary Policy statements as statements reiterates economic information already known.

GDP for example will remain low for Western nations, Inflation trades at the highs and an excruciating slow grind lower while Interest rates trade at current levels without a drop in sight.

Market exchange rate levels trade on Interest rates and Imports and Exports. Everything else is irrelevant.

What serves as analysis today is found in the word Corrigendum or the plural Corrigenda and defined by Webster’s as an error in a printed work discovered after printing.

Next week is the time in the 6 week period to release trade data. USD/JPY and the BOJ will report excellent trade data while the west remains in Economic disaster mode.

The Week

USD/JPY achieved target at 150.50 from 149.32 then decided to travel to higher overbought to reach highs at 151.17.

USD/JPY overall trades in a massive 400 pip range. The top USD/JPY line is located at 152.53 and overbought begins at any price above 150.86. Averages for USD/JPY are moving slow yet higher.

USD/JPY next week targets 150.02 easily then 149.60.

JPY Cross Pairs

JPY cross pairs for the past 3 weeks began as oversold and all traded higher. Next week begins massive overbought to include CHF/JPY. CHF/JPY targets 165.00’s, NZD/JPY low 88.00’s and low 95.00’s for AUD/JPY.

EUR/JPY targets 159.00’s and GBP/JPY 183.00’s.

If JPY cross pairs remain at current elevated levels then free money, free trades exist.

EUR/USD next week targets 1.0787 at the highs. As usual, longs trade next week.

GBP/USD must cross 1.2339 to target 1.2449.

EUR/AUD trades deeply overbought at 1.6700’s and targets low 1.6500’s easily.

GBP/AUD moves lower on a break at 1.9112. EUR/AUD is the better trade.

AUD/USD back to upper 0.6400’s. NZD/USD targets break of 0.5961 then to 0.6030.

GBP/CAD and EUR/CAD begin next week severely overbought and fairly range bound for AUD/CAD and NZD/CAD.

USD/CHF and CHF cross pairs trade fairly neutral at most vital averages. USD/CHF and CHF cross pairs require a move over the next 2 days to implement trades.

GBP/NZD traded 253 pips this week and range bound for GBP/NZD. The trade strategy for GBP/NZD and EUR/NZD is short and short highs. GBP/NZD longs and shorts are located at 2.0701.

If current levels hold, next week trades look excellent and highly profitable.

Brian Twomey

This blog was created in 2007 and contains a theme to cover market events, developments and trades. Information is found by the search button on the lower right.

The 2007 date applies to many articles written for Stocks and Commodities Magazine and Investopedia.

I offer examples. Years ago, trades were factored based on yields, yield spreads, yield crossovers, yields factored forward by the yield price to the 2nd and 3rd power depending how far to view the price. How about Yield Methodologies.

Years ago, markets moved far and wide so it was an imperative to know what you were doing plus banks used the methods highlighted in this blog and outlined in research reports. The EUR/USD for example moved 200 and 300 pips per day, 1500 – 2000 pips per month. Trade strategies had to be solid or markets would take you out faster than anybody could ever know.

Ability to hit targets in 2012 was a far different proposition than today due to movements far and wide in the old days compared to dead trade days today. This explains the abundance of trades offered throughout the past 16 years.

Much of the information I had to teach myself so each theme was written, figured and factored extensively. Hit the search button for yields and tons of educational articles will materialize. And all within the time frame when yields were the trade methodologies.

Note the current Import / Export escapade and note the abundance of articles covered during the current period. This is the way to all themes.

Interest rates is another giant theme as interest rates factored to day trades, interest rates Vs money supplies, money supplies Vs Futures prices and trades. EUR/USD Futures for example trades on ECB money supply volumes. At the time of the example, the ECB money Supply was 11 billion and the top for EUR/USD was 20 billion to the money supply. The bottom was opposite as 1 billion.

Another trade was the M1 and M2 crossover trades. The trade was taken long or short based on the M2 direction to the cross.

Yet another trade was done by Forward Points as a Forward Point is an interest rate and the best location for a Forward Point to find is between levels at the 2 year yield. This took extensive work to find and knows this information.

The massive changes to interest rates was the 2016 overhaul by the ECB. Libor was eliminated and markets since 2016 died a horrible death to ranges. All conceived and implemented by the ECB.

Currency Realignments. Here’s EUR/USD as 2 opposite currencies. Which side, EUR or USD is dominant in markets. EUR was dominant from 1999 to 2008 then USD became the overriding theme. Realignments last about 10 year in markets.

As a former college professor, Politics was covered as themes hit markets. Monetary Policy and central bank statements was covered extensively.

SNB no longer uses Debt Register Claims in daily trades. A long explanation to Debt Register Claims was covered in February 2016 as well as Tom /Next trades.

Statistics was covered from Simple Regression to Z Scores to much more. Simple Regression is a great tool to learn for today but take the next step and factor Residual Plots as Residual Plots bound ranges solidly. A Residual Plot range can’t break mathematically.

Back in the day, EM trades were abundant but not covered much today. A gazillion EM trades exist in this blog. USD/MXN was once a great mover and day trades were factored based on Mexican TIIE interest rates. Then Banxico changed TIIE rates so today, USD/MXN is a non mover in markets.

2016 was the giant change to interest rates and day trades had to re work based on the new system.

Bad trade losing. The Repair trade was shown and how to exit at breakeven or trade to target but never lose.

Correlations to USD/CAD and OIL, USD/JPY and Yields, Currency Price to interest rates. NZD to Milk, AUD/USD to Eastern Wool. Covered.

The point of this article today is the search button to assist anybody interested in how market trade, operate and the massive work devoted to the topics over nearly 20 years.

Most are lost and blinded in the entry, exit = profits category and are not interested in the how’s ands why’s of markets. But friends and followers are quite different here than in the wider spaces as all are interested, many are, traders students and market professionals.

Brian Twomey [email protected]

Here’s Australia Last 6 weeks = Exports yearly drop 10.7% Imports Yearly drop 2.4%.

Above informs exactly every word to the RBA statement especially as RBA raised. Imports will rise and Exports will continue to drop.

Compare RBA statement to the Import and Export Model. RBA raised again and more disaster lurks for Australia. They inform in the statement as RBA prefers an economic suicide mission.

The Import Side

Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago.

While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected.

Underlying inflation was higher than expected at the time of the August forecasts

Export Side

The weight of this information suggests that the risk of inflation remaining higher for longer has increased. While the economy is experiencing a period of below-trend growth.

 high inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment.

Given that the economy is forecast to grow below trend, employment is expected to grow slower than the labour force.

Wages growth has picked up over the past year but is still consistent with the inflation target, provided that productivity growth picks up.

Inflation It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality.

uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time when the labour market remains tight.

Imports = Inflation, Interest Rates, Exchange Rates, OIL, Commodities

Exports = GDP, Money Supplies, Producer Prices, Output Gap, Unemployment, Wages, Consumption, Corporate Profits, Fixed Investments, Housing.

Brian Twomey

I’m building on the the proper location for each economic announcement. Note the vital importance of the Export side as the driver of economic prosperity. Note also how to read or listen to central bankers press conferences and notice how each insertion to the Import and export side fits like a glove as it matches to Central bank words.

Powell spoke the magic words as Monetary Policy will remain restrictive and rate cuts was not considered. One sentence destroyed the entire Export side to economic expansion. A rate cut would contain the opposite effect by loosening Monetary Policy to allow Money Supply and GDP to rise.

Powell’s one sentence immediately changed the shape of the Import and Export lines as the market trades on Powell’s words. The next GDP release should travel lower as Powell failed to speak positively to Economic expansion.

GDP is the reference to Real GDP rather than the market annual rate we see released. GDP last at 4.9 as the market rate is actually 2.1 for Real GDP. Real GDP runs about 1/2 to the Market GDP rate.

Real GDP is the central bank focus as the true GDP rate because it eliminates the volatility of the market rate and because Real GDP is employed as the calculation for Imports and Exports and released every 6 weeks. Real GDP must be accurate to ensure Import and Export numbers are precise.

To factor GDP by itself for future releases, Real GDP is the only available numbers.

Deep in the BEA release is this: Imports, which are a subtraction in the calculation of GDP, increased. Best viewed as the opposite as GDP rises alongside Exports as an addition.

The current view answers the question what does Monetary Policy look like at the present juncture and movements to Import and Export Lines. What is required to fix an imbalance or not to touch any one category as all operates sufficiently. We’re interested in the whole view rather than a particular driver to an up or down Inflation rate for example.

Exchange rates is placed on the Import Side because of Interest rates mainly and because Interest rates and Inflation are the same numbers and both drive and determine the Exchange Rate price.

The Output Gap was added because the Output Gap must be positive in order for GDP to trade higher. Output Gap = GDP minus GDP divide by GDP. The Output Gap is essentially the same as GDP and belongs on the Export side.

Later, features will add for a comprehensive view such as Government spending and possibly taxes. The assumption is Government spending belongs on the Import side.

Imports = Inflation, Interest Rates, Exchange Rates

Exports = GDP, Money Supplies, Producer Prices, Output Gap, Unemployment, Wages, Consumption, Corporate Profits, Fixed Investments, Housing.

Based on each release every 6 weeks, we have Import and Export Lines as moving averages. Central banks release Import and Export Lines as monthly and yearly and usually dates back about 2 years.

Brian Twomey

The vast majority of Friday’s moves were the result of significant average breaks rather than a response to a 30,000 miss to NFP. EUR/USD’s 132 pips Friday was fairly balanced at 66 pips above and below its vital point. EUR/USD led the way in order for GBP/USD, AUD/USD and NZD/USD to trade higher and trade above significant averages. Without vital breaks, NFP’s trade result was the typical 50 pip move.

Every Central Bank has their own particular YCC as 3M to 10 year yield rates. The difference from the BOJ is they purchase 10 year JGB’s at the 10 year or 3 month to maintain strict control of the 3M to 10 year range.

Without accounting for yield curve inversions, 3 month to 10 year spreads run as:

Treasuries = 4.63 to 5.45 or 82 point range.
USDJPY 0.816 to 1.92 = 1.10

GBPUSD = 5.354 – 6.297 = 0.943
AUDUSD = 5.33 – 5.717 = 0.387

USD/CAD 6.04 – 4.83 = 1.21
NZD/USD 6.38 to 6.64 = 0.26

CHF sits completely off the radar as 1.7% Inflation for October balances against Exports exceeds Imports every month since 2012. The review ended at 2012 without an urgency to continue. The United States is a vital export nation however the Swiss trade with a long list of nations around the globe.

USD/CHF traded 132 pips last week Vs DXY at 241 and EUR/USD’s 230.
The SNB completely overhauled the interest rate system from 2019 to 2022. Inflation at 1.7 matches the most vital Saron Rate and replaces 3M Libor. For future Inflation releases, Saron is the target rate.

The Sight deposit rate = Saron + 50 and minus 50 basis points. A Threshold factor was added to ensure USD/CHF trades within the context of Saron + and minus 50 basis points. Saron last at 1.70 minus the 10 year yield at 1.09 offers 61 points.

Not only was the SNB’s Trade survey re adjusted but the SNB stands ready to intervene anytime. The communication to intervention was broadcast throughout all SNB’s publications.

The SNB’s message is USD/CHF and CHF cross pairs will forever trade in tiny ranges.

The Week

JPY cross pairs begin the week overbought and GBP/JPY, AUD/JPY and NZD/JPY will lead the way. AUD/JPY targets easily 95.92, NZD/JPY 88.31 and GBP/JPY 183.77. All are minimum targets.

AUD/USD achieved the 0.6500 target from October and November lows at 0.6300’s. AUD/USD is challenged to move higher by 2 averages at 0.6700’s and 0.6900’s. Next higher targets are located at 0.6685 and 0.6755.

AUD/USD ranges from 0.6442 to 0.6764.

EUR/AUD and GBP/AUD begins the week oversold. Higher for EUR/AUD must clear 1.6579 and 1.9105 for GBP/AUD. EUR/AUD contains easy ability to trade to 1.6200’s and 1.8700’s for GBP/AUD over next weeks. Lower by 200 pips allows AUD/USD to challenge 0.6764.

EUR/USD targets next 1.0781, 1.0806, 1.0887 and 1.0979. Long term targets reported October 7 = 1.0709, 1.0831, 1.0909 and 1.1001. EUR/USD traded 1.0500’s October 7.
For the EUR universe, overbought applies to EUR/CHF, EUR/JPY and EUR/CAD.

EUR/NZD ranges this week and EUR/AUD trades deeply oversold.

GBP/USD Long term targets previously posted : 1.2460, 1.2552 and 1.2668. GBP/USD traded lows for October and November at 1.2000’s.

GBP same story as EUR/USD. Overbought GBP/CHF, GBP/JPY, GBP/CAD while GBP/AUD trades oversold and GBP/NZD ranges.

Oversold USD/JPY contains easy ability to target 150.50. Lower must clear 147.29. CHF/JPY 167.00’s also trades easily and 163.00’s must break to trade many miles lower.
GBP/CAD and EUR/CAD overbought is added overbought to AUD/CAD and NZD/CAD.
USD/CHF and CHF cross will continue to range trade.

Overall markets are back to range trading for the week without significant breaks expected.

EUR/EM

EUR/HUF and EUR/PLN trade oversold for the week while EUR/RON begins the week overbought. Watch EUR/CZK for shorts at 24.3767.

Both EUR/PLN and USD/PLN trades deeply oversold which means refrain from trading PLN. The same situation exists to USD/BRL and EUR/BRL.

Brian Twomey

Every Central Bank has their own particular YCC as 3M to 10 year yield rates. The difference from the BOJ is they purchase 10 year JGB’s at the 10 year or 3 month to maintain strict control of the 3M to 10 year range.

Treasuries = 4.63 to 5.45 or 82 point range.

USDJPY 0.816 to 1.92 = 1.10

GBPUSD = 5.354 – 6.297 = 0.943

AUDUSD = 5.33 – 5.717 = 0.387

USD/CAD 6.04 – 4.83 = 1.21

NZD/USD 6.38 to 6.64 = 0.26

Brian Twomey