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
From yesterday’s Fed Statement: Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.
Powell offered yesterday to maintain the economic system under tight financial conditions. To drop inflation, raise GDP and to again prosper, Powell must immediately lower interest rates. Powell’s abstinence to change course offers recession, lower GDP and more hard times ahead.
Inflation remained above the 2% target for the past 2 years and 5 months while GDP traded low and stagnant since 2021. Powell gave us a 3m to 10 year inversion, higher interest and Inflation rates.
Inflation and Interest rates are the exact same number and move in tandem to each other. Only a drop in interest rates allows inflation to fall rather than on hold and do nothing. The concept to Fed Funds and Inflation as well as 3M to 10 year inversions was highlighted September 5th dating to 1968.
October’s Fed projections forecast Fed Funds at 5.1 for 2024 and 3.9 for 2025 while Core Inflation predictions at 2.0 achieves by 2026. By Powell’s 2026 term end, Inflation won’t see the 2% target.
Day Trades
Current day trades run from 2:30 am EST to 10:00 am est. With clocks at the 1 hour fall back period, day trades run from 1:30 am ET to 9:00 am est. Day trades favor traders from Europe, Asia and everybody else except the United States by ECB implementation.
Day trades are 2 week events to trade predominantly nations GDP and Inflation within the context of 6 weeks. A consensus release reveals no movements. The next hope and prayer is a central bank meeting moves markets otherwise markets trade in normal dull patterns.
Trade
Years ago, Central bank Balance of Payments was the primary release to move markets. The trade release as Balance of Payments was revamped separately to index Imports and Exports. An Import and Export now contain separate numbers and each must evaluate to understand the context to trade.
Next Week
Targets: From the weekly, NZD/USD achieved target at 0.5895 and highs traded 0.5895. AUD/USD traded 0.6400’s. EUR/AUD broke 1.6603 and target complete at 1.6467. EUR/USD target 1.0624 and shorts to 1.0567 achieved.
GBP/AUD finally traded 1.8900’s target.
GBP/USD’s target at 1.2255 traded highs at 1.2195 and opened Sunday at 1.2117.
EUR/USD’s price trades low and oversold. Next week targets 1.0639 then the resolution at 1.0678 to determination higher or lower. Long term targets remain 1.0783, 1.0806, 1.0887 and 1.0979.
GBP/USD target remains 1.2296 then 1.2461 as bare minimums. GBP/USD trades oversold and long next week is the way forward.
USD/CAD trades massive overbought and must break 1.3642 to target 1.3537 and 1.3395.
GBP/NZD higher must break 2.0716 to travel higher. Failure to break higher targets 2.0597 and 2.0277.
EUR/NZD is next to break lower by crossing below 1.7978.
EUR/AUD higher must clear 1.6590 while GBP/AUD trades massive oversold at 1.8900’s. Higher must break above 1.9117.
AUD/USD trades higher or low to do or die at 0.6437 while NZD/USD trades comfortably below 0.5941.
EUR/USD and GBP trade longs for next week and NZD/USD. Lower for AUD/USD in the 0.6340’s then longs trade next week.
EUR/CHF also trades oversold to assist EUR/USD .
USD/JPY trades next week as 148.92 – 150.66 – 152.40. Trade numbers from Japanese Customs may release at the end of next week to offer the possibility to intervention. I don’t see an intervention anytime soon.
GBP/JPY again begins next week oversold. No threats to much lower unless GBP/JPY breaks at the minimum 181.03. Longs for this week was correct then immediate shorts. GBP/JPY should top next week at 183.46.
EUR/JPY above 159.42 then shorts prevail for next week. The upper range trades 159.42 to 160.59. EUR/JPY targets 158.00’s next week easily on a break of 159.42.
GBP/JPY trades oversold and overbought to EUR/JPY. Both must reach an agreement to either oversold or overbought otherwise, both end at the bottom to our weekly trade rankings and no hurry to trade.
CAD/JPY trades oversold while AUD/JPY and NZD/JPY trade severely overbought.
JPY cross pairs lack agreement and must rectify over the next 2 trade days.
CHF/JPY trades next week 165.60 to 167.34. USD/CHF trades overbought and targets 0.9006 and 0.8972.
Brian Twomey
Tianzuida ON TRADING 