FX Next Week

The BOJ released Producer Prices today and the number is positive 0.1 from -0.1. As written, the range was 0.3 and producer prices reported expected results within range. Higher Producer prices will elevate exports for next months report.

Exports at 0.1 Vs Imports at -0.3 is closely balanced on a Yen basis and no reason for BOJ intervention. We will hear the wrong forecasts and usual drumbeats of intervention next week.

To understand the BOJ, they monitor extremely close USD/JPY, EUR/JPY and EUR/USD as largest export markets.

DXY remains in a trap to tiny ranges and DXY traded overbought all week. Overbought DXY explains ultra highs to USD/JPY, JPY cross pairs, EUR/AUD, GBP/AUD, GBP/NZD, EUR/NZD, USD/CAD. All are affected by DXY because all are DXY under a different name and number.

DXY traded 73 pips this week to 90 ish for EUR/USD. USD/JPY traded 260 pips to DXY 73. USD/JPY traded 3.5 pips to DXY and EUR/USD.

The BOJ automatically sets daily a 2 pip differential for USD/JPY to DXY and EUR/USD. The BOJ sets a 4 pip differential to EUR/JPY.

From the BOJ and recorded on my site, the BOJ set USD/JPY’s daily range at 201 pips Today’s range at 201 pips, 144.24 – 142.23.

Friday’s range at 193 pips trades from 144.20 to 142.27. Such analysis.
DXY tiny ranges are killing movements to AUD/USD, USD/CAD, NZD/USD and EUR/USD.

DXY next week trades the same 4 week range from overbought at high 102.00’s and low 103.00’s to oversold 101.00’s. A range at this capacity is a license for USD/JPY to trade freely in wide ranges.

EUR/USD next week trades dead from 1.0941 to 1.1052. The big line for higher and lower is located at 1.0964.

GBP/USD trades from 1.2657 and 1.2672 to overbought 1.2873.

Massively overbought EUR/AUD, GBP/AUD, EUR/NZD and GBP/NZD. Overbought to GBP/CAD and EUR/CAD.

USD/CZK target at 21.9248 and 21.8930 traded to lows at 22.0004 so far from high Tuesday at 22.2220.

G10 currencies contain 28 pairs and barely 14 currencies are worth the trade effort. The central banks are severely killing off market movements.

Brian Twomey

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