FX Weekly

DXY for the past 4 weeks traded 160 pips, 149, 110 and 112 pips last week. For the past 2 weeks, DXY traded 101 to 102.00’s. DXY lacked the ability to breach 103.00’s due to massive overbought and further failed to trade to oversold 101.00;s. DXY this week trades in the same positions as the past 2 weeks. At 103.00’s becomes overbought and oversold at 101.00’s.

Expected this week is a much lower DXY particularly as supports below are building as each week trades. DXY must break the 102.00 to 101.00 range as DXY is compressing ranges for all currency movements.

Producer Prices for Japan and the United States reported higher levels. The SNB reports Producer Prices and Imports this week. The United States reported Producer Prices last week but this week releases the Import and Export Price Index.

Note the alignments and how the releases are reported. Producer Prices and GDP are both essential ingredients to factor and understand imports and exports. Producer Prices are vital to understand labor costs to produce goods for exports. GDP is essential to factor imports and exports by the nations Trade Weight Index. And as termed the Effective Exchange Rate Index.

Producer Prices and GDP must release by the central banks on dates extremely close to each other in order to know imports and exports but also to know if the level of the exchange rate is to high or low.

Central banks offer monthly and yearly changes to Producer Prices and GDP dating back about 1 year and released every month. Alongside Producer Prices and GDP is monthly and yearly changes to the Exchange Rate Index.

The market focus for GDP for example is the quarterly report yet to know the parameters to the release is to check the central bank for last months numbers. Notice central bank. All central banks monitor and factor each other’s economic reports.

The BOJ for example releases GDP. The requirement is the BOJ contains last month’s GDP data to know GDP ranges. Most if not all central banks contain the same GDP data.

The Federal Reserve bank of New York provides charts on many nations economic releases yet most central banks provides charts to the same central bank economic data. All central banks provide data by the numbers every month and most provide charts.

United States imports exceeded exports for all 2022 and by wide margins. Swiss exports to the United States for April 2023 was off by – 7.7 % from April 2022 and CHF 3954 millions. Exports recovered to + 7.2% for May 2023 and Vs May 2022.

United States exports to Switzerland for April 2023 were negative by – 13.4% compared to April 2022 and CHF 1102 millions. Exports for May 2023 remained negative at -5.7% and CHF 1211 millions.

The commonality to central banks for 2022 was high Producer Prices and Imports exceeded exports. Then comes the chain reaction to vital ancillary data as all central bank GDP was lower, CPI and Inflation higher.

The next commonality to central bank data is world economics are heading back to normalization however slowly. Normalization is seen by the data numbers as well as charts from central bank to central bank. All central bank data is Indexed and monthly index numbers change extremely slow.

The problem economy and economic leader remains the United States because all central bank data is United States based. Inflation by numbers and charts remains extraordinarily high, GDP much to low. Producer Prices is assumed to substitute as Industrial Production and sits highly elevated.

The commodity most vital nation to nation is the Oil price as central bank calculations factors Oil for CPI and Inflation as well as for Imports and exports. The BOJ and BOE are prime examples.

Normalization to markets will see DXY and EUR/USD break from 500 pip ranges for all 2023 and begin trends to lead cross pairs down a clear trade path rather than trade low extreme and high extremes.

The Week

Oversold GBP/USD and GBP/CHF are mix matched to severely overbought GBP/JPY, GBP/AUD, GBP/NZD and GBP/CAD.

GBP/USD Vital break for lower is located at 1.2651. GBP/USD 1.2651 becomes deeply oversold for the week. GBP/USD overall for lower must break 1.2672 and 1.2651 and overbought at low 1.2800’s. A hold at 1.2651 places GBP/USD inside the range from 1.2672 to 1.2872.

GBP/NZD longer term targets 2.0702 then the break at 2.0573 to target 2.0351. The 2.0702 target is easily achieved on a DXY break lower. Not only is 2.0702 easily achievable but GBP/NZD must trade to minimum 2.0702 and offers 500 pips of shorts.

EUR/NZD Longer term targets 1.7598 and this is just the beginning to longer term targets. Easily 500 pips to shorts re4main available.

EUR/USD sits deeply oversold just above vital 1.0936 and ranges from 1.0936 and 1.0963 to 1.1124. We’re long for the week despite a possible break at 1.0936 and EUR/USD vital 1.0700 line. Overall, EUR/USD trades oversold from longer term averages and the usual long only strategy remains.

USD/CAD Longer term targets 1.3352, 1.3263, 1.3276 and 1.3177. Higher for USD/CAD over the past 2 and 3 weeks was the result of high and ranging higher to DXY.
EUR/AUD long term targets 1.6297 and this target is just the beginning to much lower levels.

GBP/AUD long term targets 1.8841 and just the beginning to targets at 1.8600’s and 1.8500’s.

USD/JPY targets easily middle 143.00’s.

DXY is responsible for wide range and JPY currencies to trade at Richter Scale levels. GBP/JPY for example traded 390 pips last week while GBP/USD traded 153 pips and 112. for DXY. GBP/NZD traded 2.5 pips to GBP/USD and 3.48 pips to DXY.

Both DXY and United States Economics runs the entire world as all nations are dependent on DXY and United States Economics to reap benefits for their own fortunes.

Brian Twomey