Month: June 2023

The BOJ and Ministry of Finance Trade index was created in 2017 at the same time as the 2016 YCC bands, QE, BOJ bond purchases, alignment of the JGB Yield Curve and Inflation target at 2% and higher. The BOJ truly mobilized correctly and aligned an economic powerhouse of indicators.

The GDP side of the trade index was negative for 6 months since 2016 while the index value Vs the United States massively expanded particularly from the dark days of the 2000’s when Japan trade was truly a disaster. From January 2000 to 2005 / 2006 for example, the GDP side to the index was negative every month.

The GDP side to the index answers the question how high or low will GDP rise or fall based on trade. Lows achieved 0.2 in 2016 and steadily rose to 1.5 highs for a mid point at about 0.85. At current 1.0 and positive, GDP should report positive numbers particularly as Japan trade is slated for beauty and positive for a very long time.

The yearly release of the index occurs every April to align with Japan’s Fiscal Government budgets. The index data is released on the same day as the every 3 month trade balance numbers. Most important is the Index rather than the balance of payment release because trade is understood from a deeper perspective.

On the import side is Oil and Commodity prices. Japan uses Sour Oil and only Iran and a few Gulf States export and produce Sour Oil. The high price of Oil limits exports. The commodity side addresses Copper / Steel and any metals / Goods used in the manufacturing process for such items as Motor Vehicles, Computers and ITT.

But as long as Exports remain positive and powerful then Imports are minor and small in relation to exports. Exports is a Lazer beam focus to the BOJ and consumes the research and data.

Brian Twomey

The BOJ and most important ministry of Finance are most interested in Exports as Exports historically are the source of Japan’s prosperity. Trade Balance reads as Exports Vs Imports and released every 3 months. The Japanese are vastly different to trade as they view trade for the first 10 days of every month and obtain trade data every month. Trade to Japan is derived an intense focus.

The BOJ and Ministry of Finance break down and analyze trade from Real Import and Real Export indices, by items, by nation then deflate the indices based on Real GDP. Each nation is assigned a Real Trade Balance index number and a number associated to the category of Exports and Imports such as Motor vehicles, ITT, Commodities and Intermediate Goods.

The Index eliminates price fluctuations and allows for a true view to Imports and Exports as a stand alone evaluation as trade balance numbers fail to accurately reflect the details of trade to except to highlight positive or negative balances.

In the BOJ’s words, in order to assess the developments in exports and imports consistently with real GDP, it is useful to look at those developments on a real-value basis, after excluding the effects of price fluctuations. Moreover, as for real exports, data broken down by region and by goods enable a more multi-faceted analysis on the developments in Japan’s real exports.

From this viewpoint, the Research and Statistics Department of the Bank of Japan (1) prepares data on real exports and real imports(main series) and (2) calculates real exports broken down by region and by goods(reference series). These data are released on the website on a regular basis.

The 10 day view for June

What we know and learn is nothing, zero.

Real Exports: United States Vs Japan May 2023 Vs March 2022

As a % of Real GDP = 1.0.

Index number 120.9. Historic high last 5 years = 126.00

Motor Vehicles: 131.9

Intermediate Goods: 93.1 = extremely low Vs 120 index

ITT: 105.3

Capital Goods: 110.9

March 2022

As a % of Real GDP = 1.0

United States index: 123.6

Motor Vehicles: 112.1

ITT : 119.3

Intermediate Goods: 106.7

Capital Goods: 127.9

Exports in March 2022 faced a serious challenge and the BOJ intervened. Excluding Motor Vehicles for Mat 2023, every export is below the overall Index value.

Why many Japanese comments to USD/JPY is strictly derived from the Export Index as its tells a story for a negative trade balance for July 10 and purpose for intervention.

Brian Twomey

The BOJ releases monthly Trade Statistics but the Ministry of Finance is far better to release the first 10 days of June. An overall insight to Japan’s vital July 10th Trade Balance report. The July 10 release is vital to the intervention question. A negative trade balance where imports are higher than exports could easily result in intervention to adjust JPY/USD and USD/JPY to align to exports as was the case for March 2022.

Practically every currency as Other Currency/ JPY is massively overbought. Either way, the Ministry of Finance can’t continue to hold this pressure for much longer.

Japan Consumption Tax 2019

With the rapidly progressing aging population, the government expenditure for social security benefits has been increasing year by year, and social security expenditures now account for approximately one third of the total expenditures. Meanwhile, at the current Japanese fiscal condition, tax revenue is below the increased demand on budget, which results in relying on debt and deferring the burden to future generations. The purpose of the consumption tax rate hike is to secure stable revenue and to make a social security system for all generations which is sustainable for future generations.

To make matters worse, Japan taxes food and beverages at 8%. Japan loves taxes.

Brian Twomey

EUR/USD at weeks beginning support was located at 1.0866 and longs recommended from Sunday. EUR/USD traded Monday lows at 1.0886. Longs were challenged by 1.0936 and 1.0957 as shorts were recommended as the strategy from Sunday. EUR/USD traded to 1.0976 and offered bonus points for shorts. EUR/USD shorts then traveled to 1.0880 and right back to where began the week. Overall, EUR/USD traded 90 pips higher and 96 pips lower.

EUR/USD next week trades 1.0837 to 1.0939 and 1.1118. The target is 1.1043 from 1.1037. Same long only strategy since December / January.

DXY traded 103.32 to low 102.00’s. The same 103.00’s and 102.00’s trades for next week as DXY ranges adopted severe compression. At 103.00’s becomes overbought to oversold 102.00’s. DXY’s larger 700 pip range is located from 99.00’s at the 50 year monthly average to current 1.0600’s.

AUD/USD traded to 0.6720 highs Vs AUD’s big break at 0.6735 then traveled lower to deeply oversold 0.6596. AUD/USD trades at Richter Scale oversold and targets a break at 0.6713 to then trade a wider range from 0.6713 to 0.6910. Shortest term, AUD/USD targets 0.6737, 0.6850 and 0.6886.

Massive overbought EUR/AUD and GBP/AUD from Sunday, traded to higher overbought status and offers better shorts. EUR/AUD targets 1.6143 and 1.6023 while GBP/AUD next week targets easily 1.8979, 1.8818 and caution at 1.8737.

GBP/USD traded the range from 1.2621 to 1.2859 and achieved highs Tuesday at 1.2759. From Sunday, 1.2621 decides longs and shorts. Next week, GBP/USD trades 1.2521, 1.2625 to 1.2859. Next week 1.2859 is expected to hold.

Sunday’s oversold position for USD/CAD traveled higher from 1.3116 to 1.3273. USD/CAD challenges a big break at 1.3358. Only short levels remain for USD/CAD are 1.3294 and 1.3326 to target low 1.3200 and high 1.3100’s.

GBP/USD Vs USD/CAD

GBP/USD vital break at 1.2859 is matched by USD/CAD at 1.2859. GBP/USD contains easy ability to break higher at 1.2859 while USD/CAD targets 1.2859 on a break of 1.3194 and 1.3119.

GBP/USD breaks 1.2859 then trades a range from 1.2859 to 1.3249 while USD/CAD would trade 1.2859 to 1.2613.

Overall GBP/USD Vs USD/CAD: The break for GBP/USD at 1.2859, targets USD/CAD 1.3003 on a break at 1.3194. USD/CAD break 1.3119 targets 1.2956. GBP/USD runs into 1.2956 when USD/CAD breaks 1.3119.

GBP/CHF targets 1.1343 and 1.1589 while GBP/CHF must hold 1.1322. Next week 1.1400;s become overbought.

EUR/CHF must clear above at 0.9801 to target long term at 1.0064. Next week, EUR/CHF contains easy ability to travel to high 0.9800’s. EUR/USD is holding EUR/CHF from far better movements.

Deeply oversold NZD/USD challenges a break at 0.6181 and targets 0.6210. Above 0.6181 NZD/USD trades a wider range from 0.6181 to 0.6298.

Quick trades and decent profits next week begin with AUD/USD, NZD/USD, GBP/CHF and EUR/CHF.

GBP/CAD and EUR/CAD from Sunday began last week oversold and traded 136 pips higher. GBP/CAD and EUR/CAD begin next week oversold.

Severely overbought EUR/NZD targets 1.7700’s next week without much effort then 1.7600’s. GBP/NZD targets next week at 2.0677 then 2.0500’s.

USD/JPY Vs EUR/CAD

USD/JPY 144.36 Vs EUR/CAD 1.4482. USD/JPY and EUR/CAD Correlate at minus 65%. Multiple trades exists at crossovers.

Brian Twomey

From 2 perfect opposite currencies comes 2 trades in the opposite direction. A price path is required for every trades to know the start, stop and not so important middle points. Day trades are factored and traded by the fingers or a cheap calculator. All aren’t day traders. All are Ping Pong players to hit longs and shorts.

8 day trades, takes about 35, 40 minutes and shorter if ranges are compressed.

GBP/USD

Long Short Line 1.2622

Most Important 1.2566 and 1.2613 Vs 1.2630, 1.2638, 1.2646, 1.2654, 1.2670, 1.2678, 1.2686

Bottom 1.2558 achieves by 1.2574 and 1.2590

Upper Target 1.2686

Continuation Fail 1.2654

USD/CAD

Long Short Line 1.3277

Most Important 1.3218 and 1.3268 Vs 1.3287, 1.3293, 1.3301, 1.3310, 1.3327, 1.3335, 1.3344

Bottom 1.3210 achieves by 1.3226 and 1.3243

Upper Target 1.3344

Continuation Fail 1.3310

Main Point Strategies:

GBP/USD 1.2622 Vs USD/CAD 1.3277

GBP/USD 1.2654 Vs USD/CAD 1.3244

GBP/USD 1.2686 Vs USD/CAD 1.3210

GBP/USD 1.2558 Vs USD/CAD 1.3344

Deeply Technical to match levels:

GBP/USD 1.2630 Vs USD/CAD 1.3268

GBP/USD 1.2638 Vs USD/CAD 1.3243

GBP/USD 1.2646 Vs USD/CAD 1.3226

GBP/USD 1.2670 Vs USD/CAD 1.3218

Brian Twomey

The alignments for GBP/USD and USD/CAD are beautiful and allows for crossover trades. An example to cross over trades: EUR/CAD 1.4468 Vs USD/JPY 144.35. Correlation run minus 80% which says one currency goes higher while the next currency goes short.

GBPUSD 1.2625 Vs USDCAD 1.2613

GBPUSD 1.2859 Vs USDCAD 1.2859

GBPUSD 1.3249 Vs USDCAD 1.3358

The break for GBP/USD at 1.2859, targets USD/CAD 1.3003 on a break at 1.3194. USD/CAD break 1.3119 targets 1.2956. GBP/USD runs into 1.2956 when USD/CAD breaks 1.3119.

For the next week, GBP/USD supports are located at 1.2520 and 1.2625 Vs 1.2859 as next vital break for higher. USD/CAD 1.3358. Long GBP/USD and short USD/CAD.

I’ll work out the levels further

Brian Twomey

A day trade is an interest rate converted to an exchange rate. Central banks instructed how this is done with much work. All financial instruments are traded as interest rates converted to market prices. Mathematically perfect in every which way possible.

Whatever BS is applied to markets today is already factored inside today’s prices because a market price is a forward traded instrument. It doesn’t dwell on today’s developments nor does market prices care. A market price must move to the next forward price and continuously move in this manner.

No Fibonacci. Fibonacci numbers are wrong numbers applied to an incorrect market price. A central bank never ever uses Fibonacci numbers for trades nor analysis.

GBP/USD and USD/CAD spreads 8 pips but in opposite directions. GBP always outperforms USD/CAD as GBP/USD is the better trade.

AUD/USD and NZD/USD spreads 4 pips or 1/2 the distance to GBP/USD and USD/CAD. AUD/USD is the better trade because its more closely aligned to GBP/USD while NZD/USD is more closely aligned to USD/CAD. EUR/USD is more closely aligned to DXY.

On a larger scale, GBP/USD at 1.2700’s Vs USD/CAD at 1.3200’s spreads 500 ish pips. Very short distance. Says a move is coming.

GBP/USD

Long Short Line 1.2732

Most Important 1.2675 and 1.2722 Vs 1.2740, 1.2748, 1.2756, 1.2764, 1.2780, 1.2788, 1.2796

Bottom 1.2668 achieves by 1.2684 and 1.2700

Upper Target 1.2796

Continuation Fail 1.2764

USD/CAD

Long Short Line 1.3217

Most Important 1.3158 and 1.3207 Vs 1.3225, 1.3233, 1.3241, 1.3250, 1.3266, 1.3274, 1.3283,

Bottom 1.3151 achieves by 1.3167 and 1.3184 

Upper target 1.3283Continuation Fail 1.3250

AUD/USD

Long Short Line 0.6641

Most Important 0.6611 and 0.6637 Vs 0.6645, 0.6649, 0.6653, 0.6658, 0.66==, 0.6670, 0.6675, 

Bottom 0.6607 achieves by 0.6615 and 0.6624

Upper Target 0.6675

Continuation Fail 0.6658

Brian Twomey

Today Day trade

EUR/JPY

Long Short Line 156.87

Most Important 156.48 and 156.79 Vs 156.97, 157.06, 157.16, 157.26, 157.46, 157.56, 157.66

Bottom 156.08 achieves by 156.27 and 156.47

Upper Target 157.66

Continuation fail 157.26

Volatility measured in pips. EUR/JPY currently spreads every 10 pips and quite extraordinary as normal trades 7 – 9. An expansion of range. This means multiply.

The problem and early warning for months at 10 pips. Next problem and early warning = ends in 6 at top and 7 on the bottom. If 6 on top then 5 should locate at the bottom for supports but instead 7 on the bottom. This says EUR/JPY is off kilter and a problem exists to the price path. If a problem exists to a day trade price path then its reflected in the larger ranges. Its multiplied.

We’ve seen it for months as ranges went from 73 to 79.

Any discernment to USD/JPY price path except it spreads 9 and Vs EUR/JPY at 10. Cross pairs always trade higher and wider ranges than anchor currencies. That’s just FX 101. Its multiplied.

USD/JPY

Long Short Line 143.58

Most Important 143.22 and 143.50 Vs 143.67, 143.76, 143.85, 143.94, 144.12, 144.21, 144.30

Bottom 142.86 achieves by 143.04 and 143.22

Upper Target 144.30

Continuation Fail 143.94

GBP/JPY says spreads 23 pips but broken down to 11 pip spreads. Odd and uneven numbers and an off kilter daily price path informs to early warning.

GBP/JPY

Long Short Line 182.95

Most Important 182.49 and 182.86 Vs 183.06, 183.18, 183.29, 183.41, 183.64, 183.75, 183.87

Bottom 182.03 achieves by 182.26 and 182.49

Upper Target 183.87

Continuation Fail 183.41

EUR/JPY, USD/JPY ands GBP/JPY daily numbers change incredibly fast and this must be tracked and factored everyday for accuracy. GBP/JPY daily numbers over last months increased by 20ish pips while USD/JPY increased by 10 and 12 pips.

The structure of the day trade never changes as this is written in mathematical stone. Only changes are daily numbers but once the daily numbers are known then daily profits mount higher and higher.

Same principle to structure for 24 hour trades, weekly, long term and any other trade that exists. Numbers change but structure and formulas are again written in mathematical stone. Numbers fit inside structure.

Brian Twomey

The Japan, BOJ and USD/JPY question to intervention from a trade perspective is a moot point as the BOJ Trade Weight Index from Nominal and Effective exchange rates operates as a picture perfect Picasso. The intervention question becomes very real in terms of the USD/JPY price at 143.00’s in relation to the current Nominal Exchange rate index at May’s reported 80.5.
Al data, charts and information was derived from the BOJ.
The Nominal exchange rates are highlighted in Blue while the Real Effective Exchange rates were chosen as Orange.

BOJ Monetary Policy in the 1990’s Pegged USD/JPY to GDP and the Money Supply. The BOJ not only intervened practically on a daily basis to adjust USD/JPY to the Money Supply but volatility was out of control and trade was a disaster as seen from the difference from Nominal to Real exchange rates. Also seen is the BOJ’s unyielding ability to continue with any monetary policy until it crashes.

The shining light for the BOJ was 2016 to present as the BOJ adopted negative interest rates and adjusted the YCC bands by a 25 point expansion.

Picture perfect Picasso refers to the correct positions as the Nominal rate above the real Effective Exchange Rate. The current Nominal rate at 80.5 vs the Effective Rate at 76.2 shares a 5 point difference. From December 2022 to May 2023, the nominal rate sat 5 points higher than the effective rate.

Most vital to Nominal and Effective Trade Weight Indices is both were updated and adjusted January 2023 as all central banks adjust trade weight indices normally every 5 years.

The lower effective rate is a reflection of adjusting the nominal rate to Inflation as Japan’s trade partner nations contain higher inflation rates. Higher inflation rates increases Japan’s cost of goods and must account for its exports for positive results and profitability.

The Nominal rate is factored by annual value of Japan’s trade with the respective countries and regions as its weights. It is then converted into an index using a base period of 100.

The most vital BOJ economic release is the Domestic Corporate Goods Price index as the index is employed to create Nominal and Real Trade Weight Indices factored against trade partner releases to Producer and Wholesale Prices.

USD/JPY in Red Vs the Blue Nominal Exchange Rate Index. The BOJ intervened October 22 when USD/JPY traded 151.00’s and the most important Nominal Rate was below 80.0. Today, USD/JPY at 143.00’s Vs the Nominal rate at 80.00’s trades a far distance.

While a good argument exists to intervention, the BOJ intervened October 2022 at 151.00’s when DXY traded its maximum top at 114.00’s and miles above the 50 year monthly average at 99.00;s. DXY not only achieved its peak but was falling from 114.00’s as was USD/JPY at 151.00’s and by no other choice.

Brian Twomey

Brian Twomey

EUR/USD begins the week trading a 114 pip range between vital points 1.0822 to 1.0936. EUR/USD last week traded a 168 pip range and 78 pips lower than 2 weeks ago at 238 pips. EUR/USD’s range 2 weeks ago at 238 was EUR/USD best range week in the past 10.

At 10 weeks ago, EUR/USD traded 245 pips and the highest range. Overall, EUR/USD averages 167 pips per week for the past 10 weeks and a 3 month range from 1.0500’s to 1.1000’s.

EUR/USD shorts are located on a break at 1.0866 and a reload long as 1.0822 is expected to hold. On the upside, 1.0936 is also expected to hold as EUR/USD runs into a brick wall at 1.0957. Shorts at the 1.0936 concludes a week of range trades.

GBP/USD’s best range at 362 pips traded 2 weeks ago and last week at 156 pips. GBP/USD’s best weeks over the past 10 weeks traded 362, 235, 222 and 218. Overall, GBP/USD trades a 204 pip weekly average for the past 10 weeks and 37 pips higher than EUR/USD.

GBP/USD commonality over the past 10 weeks was trade at vital points from 1.2300’s, 1.2500’s and 1.2800’s. GBP/USD over next weeks trades from 1.2507, 1.2621, 1.2858 and 1.3186. The bottom side is rising while the topside is falling.

GBP/USD at 1.2868 and 1.2507 holds for the week as 1.2621 decides GBP/USD longs and shorts.

DXY’s 10 week highs traded best ranges at 175 and 167 pips. DXY runs a 10 weekly average at 132 pips. DXY for the week trades.

The point of departure at 10 weeks is exactly when EUR/USD topped at 1.1097 and DXY bottomed at 100.00’s from 114.00’s. EUR/USD traded 6 weeks higher and 4 weeks lower while DXY traded 5 weeks higher to 5 weeks lower. GBP/USD traded 6 weeks higher to 4 weeks lower.

USD/JPY Vs DXY

DXY bottomed 10 and 11 weeks ago at 100.00’s from 114.00 tops at the same time USD/JPY bottomed at 133.00’s. DXY then traveled 7 weeks later to 104.00;s as USD/JPY traded to 143.00’s. USD/JPY traded 2.31 pips for every 1 pip to DXY and 6 weeks higher to 4 weeks lower to match GBP/USD.

USD/JPY Vs EUR/USD

Opposite DXY is the EUR/USD top at 1.1097 as USD/JPY bottomed at 133.00’s. USD/JPY traded 2.35 pips to EUR/USD and perfectly consistent to DXY. EUR/USD maintains a correlation at +63% to EUR/USD and this is a problem for current markets as correlations must run traditional negative.

USD/JPY

Nothing unusual exists to USD/JPY moves in relation to DXY or EUR/USD. The problem for USD/JPY was an extremely overbought exchange rate at 133.00’s. DXY as the problem currency trades above 50 year monthly averages and is naturally and historically overbought.

USD/JPY, DXY, Fed and BOJ

USD/JPY long term targets 136.85, 130.62 and 127.02. The question to BOJ intervention is answered by what is the purpose to intervene. The problem is not Japan and the BOJ as YCC, Inflation, JGB yield curve and Exports are operating perfectly. The dilemma derives from Interest rate happy Powell, Inflation and an extremely overbought DXY. The FED should intervene on DXY.

USD/JPY targets 141.20 for the week while DXY must eventually challenge the 50 year monthly average at 99.00’s.

3 Trade Combo: AUD/USD, EUR/AUD, GBP/AUD

Severely oversold AUD/USD Vs massive overbought EUR/AUD and GBP/AUD offers a 3 trade combo. GBP/AUD targets easily 1.8840, EUR/AUD easily 1.6200’s and 1.6100’s and AUD/USD to challenge the vital break at 0.6735.

GBP/NZD Vs EUR/NZD

GBP/NZD break at 2.0673 targets 2.0608 2.0508 and 2.0409 while EUR/NZD targets 1.7680 and 1.7583. Longer term on a break of 1.7485, EUR/NZD target 1.7324.
USD/CAD trades oversold for the week while CAD/JPY along with all JPY cross pairs targets lower easily by 800 and 1000 pips.

EUR/CAD and GBP/CAD begin the week oversold.

Overall currency markets trade in tight ranges against correlation problems to EUR/USD Vs USD/JPY, JPY cross pairs to anchor currencies and DXY historically overbought. Level of DXY is the main issue and offers tight range currency markets until DXY trades lower at an acceptable level.

Brian Twomey

#USDJPY Here’s most vital Call Rate history. #BOJ will raise due to #Inflation at 3%. Listen. #BOJ Not touching #Interestrates All see Negative #Rates on a negative scale but a negative Rate is positive. Minus 0.1 = +0.9 beautiful position for #Japan

#BOJ at 3% Inflation +

Brian Twomey

Assumption USD/JPY on top, Effective Trade Weight Index below

Balance of Payments

Assumption Call Rates, most Important to Japan and BOJ

n March 2023 Japan exported ¥8.82T and imported ¥9.58T, resulting in a negative trade balance of ¥755B. Between March 2022 and March 2023 the exports of Japan have increased by ¥366B (4.32%) from ¥8.46T to ¥8.82T, while imports increased by ¥656B (7.35%) from ¥8.92T to ¥9.58T.

March 2023 informs to Intervention. Next release July 10 and this is a big day in regards to intervention

In March 2023, the top exports of Japan were Cars (¥1.25T),

In March 2023, Japan exported mostly to United States (¥1.68T), China (¥1.55T), South Korea (¥620B), Taiwan (¥571B), and Thailand (¥381B), and imported mostly from China (¥2.12T), United States (¥1.04T), Australia (¥831B), United Arab Emirates (¥443B), and Taiwan (¥398B).

In March 2023, the increase in Japan’s year-by-year exports was explained primarily by an increase in exports to United States (¥144B or 9.37%), India (¥68.1B or 47.9%), and Mexico (¥52.6B or 48.3%), and product exports increase in Cars (¥376B or 43.2%), Refined Copper (¥38.6B or 80.9%), and Refined Petroleum (¥33.2B or 25.9%). In March 2023, the increase in Japan’s year-by-year imports was explained primarily by an increase in imports from China (¥232B or 12.3%), Australia (¥112B or 15.6%), and United Arab Emirates (¥97.3B or 28.1%

• May nationwide core CPI +3.2% yr/yr vs f’cast +3.1%
• Rise in May slows from 3.4% yr/yr increase in April
• Index stripping away fuel, fresh food up 4.3% yr/yr in May

Japan and the BOJ are living the dream

Brian Twomey

Today is the Thailand Trade show and another of the tall tale bull artists. Post Churchill’s words above the computer as this applies to so so many today. I always said at least 90%.

There is no sphere of human thought in which it is easier to show superficial cleverness and the appearance of superior wisdom than in discussing questions of currency and exchange.

– Winston Churchill, House of Commons, September 29, 1949

Brian Twomey

USD/CAD’s long term target reported January and updated in March at 1.3168 and 1.3033 traded today at 1.3150. USD/CAD actually formed a double bottom on today’s hourly chart at 1.3150. USD/CAD for January and February traded a range from 1.3200’s to 1.3600’s then broke 1.3500’s in March to trade 1.3800’s.

Since March at 1.3800 highs, USD/CAD spent 3 months trading to the 1.3168 target. Yet overall USD/CAD’s price path traded on the uneven side. The break of vital 1.3500’s delayed target completion much sooner than anticipated. The commonality to the target was 700 pips from 1.3800 highs or 300 X 2 and the same pip amount targets reported for all trades from January to March.

From USD/CAD, next travels to hubris and pomposity. Once a target is identified, its mathematically impossible not to trade to target. The specialty is targets and this is known from 12 years and gazillions of past trades posted at FXStreet.

No such concept as loss exists once a target is identified. Time may or may not remain on the right side. January to March trades all traded perfectly but USD/CAD decided to wait an additional 3 months. Never, ever doubt the target as we can’t defeat mathematics.

USD/CAD averages radically changed over the past 6 months. On the bottom side exists 1.2860 and 1.2613. On the topside we have 1.3124, 1.3204 and 1.3395. Next targets below are 1.2999 and 1.2950. Above 1.3124 targets are: 1.3180, 1.3290 and 1.3298.

The USD/CAD price upon target completion is now a settled and range price. No longer does a 700 pip trade exists and may not materialize for the next 1 and 2 years. This means USD/CAD now shifts to profits from the 7 and 24 hour and weekly trades.

YCC

Most vital to the YCC bands is 0.5 rather than minus 0.5. The BOJ must be laughing hysterical as they played the trading crowds like a fiddle. Every central bank on the planet contains their own personal YCC bands within the context of the yield curve. Most central bank bands are much smaller than the BOJ because the BOJ must address JPY/USD and 7 numbers as current USD/JPY 141.89 Vs JPY/USD 0.0070477.

The BOJ says we are buying bonds between 0.5 to minus 0.5 or 1.5 and 100 basis points. This works for Monetary policy and to achieve and sustain the 2% Inflation target but contains zero and tiny effects for USD/JPY. The BOJ uses export and interest rate methods to address levels of USD/JPY but only when JPY/USD is affected.

The BOJ doesn’t give a lick to USD/JPY levels until JPY/USD becomes an Economic problem.

Credit to the BOJ as they see early warning to economic problems ahead as they view exchange rate levels for USD/JPY and JPY/USD in 1000 and 2000 pip increments. All central banks traditionally pre 2016 viewed exchange rate levels in 1000 and 2000 pip increments but disbanded this practice upon the new post 2016 interest rate changes. The BOJ maintained the old practice to the long view as did a few EM central banks such as Norway, South Africa, Brazil, Turkey.

The Week

DXY maintained a tiny range as forecasted Sunday due to many averages above 102.00’s and falling on the current DXY price. DXY remains in the same position for next week aa 101.00’s become oversold and 103.00’s are blocked by many averages. DXY will eventually trade to 100.00’s and challenge the 50 year monthly average at 99.00’s.

Overbought GBP/USD held 1.2850 and traded to 1.2837 highs and lows to 1.2690. GBP/USD big break for higher is now 1.2857 and overbought begins at low 1.2800’s and targets easily 1.2712 and 1.2618. GBP/USD overall traded 1.2501, 1.2618, 1.2857 and 1.3250.

EUR/USD target at 1.1037 traded to 1.1003. EUR/USD trades 1.0818, 1.0935 and 1.1117. EUR/USD trades massive overbought and 1.0935 becomes the vital level for shorts next week.

GBP/CHF trades a 372 pip range from 1.1324 to 1.1696. Currently GBP/CHF trades overbought from 1.1443 and consistent to overbought GBP/USD.

EUR/CHF trades 0.9801 to 1.0136 and currently on the verge of a break at 0.9801. Oversold next week begins at 0.9759 on a break at 0.9801 and a good long trade for next week.

AUD/USD trades 0.6742 to 0.6919. AUD/USD threatens a break at 0.6742 to trade back to 0.6600’s as low 0.6800’s becomes overbought.

NZD/USD trades 0.6192 to 0.6404. Break at 0.6192 targets middle 0.6100’s and long again to middle 0.6200’s.

USD/JPY lows traded to `141.20 and target at 140.03. Next week targets 140.77 then 140.14.

DXY small ranges is holding up progess yet again in order for currency prices to trade a pip for pip basis. Currency markets are trading the percentage basis trades. Same story for next week.

EUR/AUD shorts for next week as EUR/AUD is now held higher by 1.6049. GBP/AUD shorts next week targets again at 1.8600’s as GBP/AUD is also held at 1.8544 in order to travel lower.

GBP/NZD no changes to 1.0670 and targets at 2.0300’s, 2.0200’s and 2.0100’s. Lows this week achieved 2.0527 and targets 2.0300’s for next week. GBP/NZD is preferred over EUR/NZD as the better trade.

GBP/CAD and EUR/CAD trade not only mid range but highly divergent to each other. Higher GBP/CAD at 1.6900’s then short and compliance to overbought GBP/USD and GBP/CHF.

Volatility definition. Measured by pips and ranges.

Brian Twomey

OCR reports goes back to May 1976 on the RBA site. OCR was first introduced in 1969 if memory serves. The OCR target began in 1990. Bank Accepted Bills or CD’s goes back to July 1997. OCR highest and lowest levels began May 2013. OIS rates 1, 3 and 6 months goes back to 2001. Most important Bank Bills was eliminated from the RBA site.

Yesterday morning. Most vital to AUD/USD and Australia interest rates are here 0.6865, 0.6870. If the price path has a 5 then guaranteed to see 2 levels at 5 back to back. Same principle holds for AUD/USD and RBA interest rates in the 1970’s 1980’s, 1990’s and 2000’s. Done by RBA design and absolute fact as I did the work.

The RBA once reported all interest rates dating to 1960’s and 1970’s but since eliminated.

Hopefully an instructive lesson.

Long Short Line 0.6853

Most Important 0.6838 and 0.6848 Vs 0.6857, 0.6861, 0.6865, 0.6870, 0.6879, 0.6883, 0.6888

Bottom 0.6818 achieves by 0.6826 and 0.6835

Upper Target 0.6888

Continuation Fail 0.6870

Brian Twomey

At the start of a nation is required an interest rate then an exchange rate. Or did the exchange rate come first then the interest rate. Doesn’t matter nor worth a discussion because both are the exact same instrument. All see 2 different numbers as interest and exchange rate but no difference exists to both numbers.

An interest and exchange rate must correlate 100%. The correlation holds for 1 minute to years in the future by monthly and yearly averages. If an exchange rate moved by 1 pip in the market then an interest rate move the same corresponding points. And vice versa.

Evaluate this concept. An Fx price and interest rate is not normally distributed. A guy invented an Algo based on this concept and claims 70% win rate over a few years.

What’s wrong with this guy beside everything. As a correlation achieves 100% at any check to any time frame, the exchange and interest rate is actually perfectly distributed to each other. Its impossible not to trade together and at normally distributed times and levels.

Look at the words distributed and distribution as ranges then the story should become clear.

Second to this guy is Algo. Trust these words. This Algo business assumes a market price factors to the computer and all required is let it run for instant and guaranteed profits. Don’t ever believe one word from these types.

See the guy at 70%. Give the guy time for trade market periods at 50% and 40%. The guy is a loser and he will continue to lose. All Algos are losers in the end.

Take this guy on Linked IN. His name is Tom. His Algo trades 5 and 6 pips. Many are winners. He posts a track record of 5 years. We ran his numbers. Guess what. Tom lost big money after 5 years. Tom’s subscribers all lost big money. Just 1 or 2 good years is meaningless to what happens over time.

But he talks Static vs Dynamic prices and sucks in all the people to believe they will make money. He ends up running a churn service to take subscription money from unsuspected. When they lose, new subscribers come and the process repeats.

Best trades and biggest winners are factored by pen, paper and calculator. All based on formulas. Formulas are as old as the nations themselves.

In 100 years of markets, nobody ever figured out the formulas. Traders pick out a tiny portion of a larger market and use this portion to trade. Its works, until it fails then the trader is in money troubles.

Brian Twomey

DXY for the week will struggle to break 103.00’s and trade to 104.00’s as averages are again building at 102.00’s and 103.00’s to prevent a DXY rise. The weekly downside dilemma to DXY is middle 101.00’s become severely oversold. Yet the downside and shorts is the only trade available.

DXY’s beginning position for the week translates to severely overbought to EUR/USD, GBP/USD and AUD/USD particularly from lower averages. Instead of EUR/USD, GBP/USD and AUD/USD trading to a normal and workable Friday close price, all decided to challenge vital points higher. GBP/USD failed to break 1.2850, EUR/USD 1.0987 and AUD/USD at 0.6914.

The end result for EUR/USD, GBP/USD and AUD/USD is a shallow and overbought close price and weekly positions just below vital points. All GBP currencies suffered the same fate as GBP/USD. GBP/CAD for example failed at 1.6947, GBP/CHF at 1.1511 and GBP/NZD at 2.0670.

The Week

All GBP currencies begin the week overbought. GBP/JPY’s monthly Averages from 32 to 38 years run as 172.24, 174.83, 176.61, 178.02, 179.57, 181.07 and 184.14. GBP/JPY correlation to USD/JPY = 92% and GBP/JPY to GBP/USD at 91%.

GBP/USD lacks ability to break and hold at 1.2850. For the week, lower to 1.2600’s then long for next week to break 1.2850 and trade higher. Averages align as 1.2434, 1.2599, 1.2850, 1.3246. The GBP/USD break at 1.2850 and 1.2850 to 1.3246 range places GBP in a historic midrange from 1.1800 lows and the 2016 Brexit drop at 1.4800’s in June 2016.

GBP/NZD averages severely compressed over the past 2 weeks. GBP/NZD’s top is located at 2.0670 and targets 2.0318, 2.0242 and 2.0054. Longer term, GBP/NZD vital averages are found at 1.9900’s and 1.9800. GBP/NZD is the preferred currency to EUR/NZD.

GBP/CHF trades overbought inside 1.1299 to 1.1693. EUR/CHF trades 0.9788 to 1.01398. Both GBP/CHF and EUR/CHF trade oversold and contain enormous potential to trade much higher than current range points. GBP/CHF and EUR/CHF support higher to GBP/USD and EUR/USD on long only strategies.

JGB 10 Year, BOJ and USD/JPY

The JGB 10 year opens at 0.403 and last week 0.426. The 10 year last week was to high in relation to the YCC band and was forced lower.

The 10 year minus 3M = 0.538 and perfectly bumps against the YCC band. Inside the 10 year minus 3 month offers analysis to the domestic interest rate. The 10 year minus 2Y = 0.467. Not terrible in relation to YCC bands.

YCC not only operates perfectly but allows the BOJ to view USD/JPY and JPY cross pairs in increments of 1000 pips. A lower USD/JPY won’t derive from the YCC bands unless the bands lose control. The economic side as the monetary base, GDP and Inflation are primary to view for a lower USD/JPY. The BOJ intention is an overshoot and tiny range above the 2% Inflation target much the same as the BOC in Canada.

The BOJ last intervened October 2022 at USD/JPY 151.00’s or JPY/USD at 0.0066216. Current USD/JPY at 141.85 trades JPY/USD at 0.0070497 and a difference of 0.0004281. At USD/JPY 151.00’s, Japan imported more from Asia, Europe and the Middle East than exports.

By May 2023, the export/ import story turned fairly Export positive for Japan particularly for Asia, United States and parts of Europe. Intervention wasn’t a question to level of exchange rate but exchange rate level in relation to Exports.

USD/JPY targets easily 140.03 and 139.48.

EUR/USD

EUR/USD vital levels for the week are located at 1.0927 and 1.0856. EUR/USD trades from 1.0771 – 1.0926 and 1.0927 to 1.1114. Long term target remain 1.1037.
EUR/CHF big break above 1.0138 and coincides to GBP/CHF at 1.1693.

AUD/USD trades 0.6718 to 0.6916, above targets 0.6959 and 0.7002. NZD/USD 0.6174 to 0.6403.

USD/EM

USD as USD/EM trades massive oversold. Oversold USD/CZK higher targets 21.7876 and 21.9154. USD/HUF and USD/DKK begins the week oversold. Oversold USD/PLN targets 4.1260.
USD/RON targets 4.5503 and 4.5609

Brian Twomey

Outlined is the 3 trade combination but GBP/USD was the leader currency yesterday to signal shorts for a 5 trade combo to all GBP currencies. GBP/USD began shorts with failure to trade above 1.2850. Thursday’s post informed to 1.2847.

From GBP/USD 1.2850, lows traded to 1.2804. GBP/CAD 1.6947, and lows traded to 1.6896, GBP/CHF 1.1511 as highs traded to 1.1471 and lows to 1.1443. GBP/NZD 2.0670, highs 2.0633 and lows to 2.0544. The GBP universe is working perfectly.

GBP/AUD also worked as shorts from 1.8692 and 1.8686. GBP/AUD is the outlier currency to the GBP universe as GBP/AUD has no business above 1.8582. But also because GBP/AUD achieved 1.8692 highs before all GBP currencies tested significant tops. GBP/AUD then traded to 1.8643 on the next hourly candle and traded to highs at 1.8686. Then dropped to 1.8638.

As all GBP currencies tested vital tops and failed to trade above, GBP/AUD was at 1.8686. GBP/AUD demonstrated a radical price path and this represents a problem to trade GBP/AUD especially as a combo trade for the entire GBP aggregate.

While all GBP currencies traded to specific tops and clearly known and identified, GBP/AUD traded inside a range or better stated as an interval. The interval break down showed the specific top yet GBP/AUD topped at 1.8692 the hour before all GBP currencies then traded again to 1.8686.

Can we say GBP/AUD provided early warning to impending tops for all GBP currencies. No because GBP/AUD is not a leader currency, its a follower to all GBP currencies. GBP/CHF, GBP/CAD and GBP/NZD serve as leader currencies. In normal trade periods, GBP/JPY usually works as well. The standard leaders are GBP/CHF as bottom exchange rate, GBP/CAD as middle and GBP/NZD as top.

If a lesson exists here, observe the most important price paths. GBP/AUD clearly demonstrates as an outlier and problem.

Note the levels for all GBP currencies and the points to shorts.

GBP/USD 1.2599, 1.2850, 1.3246, 1.3673

GBP/CAD 1.6629, 1.6843, 1.6947, 1.7094

GBP/NZD 2.0670

GBP/AUD 1.8639 to 1.8766.

GBP/CHF 1.1693, 1.2108, 1.2525.

Brian Twomey

This article was intended for FX dumbstreet but I decided against. Its been over 12 years, much research written 1000’s upon 1000’s of numbers entered and a million target pips achieved. Many perfectly as this is my way. Way back, I hit many targets for GDP, NFP and many economic releases.

Knowing GDP and NFP targets allowed for automatic trades to EUR/USD and other currencies. I’ve done it all and can’t do anymore.

I could’ve turned the many losing trade services into million dollar operations and turned out a conveyor belt of profitable traders. Every last person involved would’ve been happy and wealthy. The trade services lost their credibility by mounting losses and incompetence. Today’s trade services are not based on credibility or profits but rather relationships.

Enough said as this is a trader and trading blog.

GBP/JPY’s monthly Averages from 32 to 38 year run as 172.24, 174.83, 176.61, 178.02, 179.57, 181.07 and 184.14. GBP/JPY correlation to USD/JPY = 92% and GBP/JPY to GBP/USD at 91%.

GBP/JPY is not only overbought from 170.00’s but also from 160.00’s and 150.00’s.

GBP/USD 1.2598, 1.2849 and 1.3246. GBP/USD’s target at 1.2731 completed yesterday. Lows traded 1.2300’s and 1.2400’s. Entry was anywhere from 1.2300’s to 1.2400’s. Entries are irrelevant as only targets are vital.

EUR/USD targets 1.1037 and averages run as 1.0766, 1.0925, 1.1113 and 1.1350. EUR/USD traded highs today at 1.0961 and 76 pips to target.

AUD/USD 0.6704, 0.6914, 0.7067

DXY as written and written going to 100’s easily and 200 more pips to drop. ADD 200 pips to EUR, GBP and AUD for next targets higher.

USD/JPY ranges on Monday.

Brian Twomey