(Brian Twomey – Brian’s Investment)
GDP yesterday reported -0.9, we had -1.0 and the Atlanta Fed -1.2. By the data, it was clear the Atlanta Fed was off its forecast. Not that it matters as the currency and market price would’ve traded to the exact same levels despite the variation to GDP forecasts.
The laugh to the forecast is 12 numbers were required and voila, -1.0 was done. Anybody could’ve performed the same quick operation and found -1.0. Anybody today can factor the new GDP averages and find the next GDP release. Nothing will change in 3 months.
The GDP and any economic release is a stand alone entity and factors by itself. The only difference between today and yesterday is a slight change to the averages. And the change is very slight. The 1 year average at 1.04 should drop so the forecast in turn should also drop for the next quarter.
NFP is coming and NFP as a stand alone release factors the exact same as GDP averages. The only difference is NFP contains different numbers than GDP. See my blog at btwomey.com for many. many past NFP forecasts.
Also see my blog as posted Sunday was weekly levels for 20 currency pairs.
Currency markets next week focus is on the big MA break to MA points and terrific movements. Market prices brought us to the brink as markets are known to perform time and time again.
USD/JPY is the main focus as 132.36 is here to change the entire USD/JPY trajectory from longs to shorts.
JPY cross pairs
EUR/JPY broke lower yesterday at 137.88 and now trades 135.00’s. GBP/JPY broke below 162.72. NZD/JPY broke below 83.95. AUD/JPY and CAD/JPY are hold outs at 92.45 and 102.96 for CAD/JPY.
EUR/USD has a long way to go before 1.0439 breaks higher. Monitor bottoms to EUR/USD by EUR/CHF current 0.9736 and big break for higher at 1.0034. Also USD/CHF at current 0.9515 and big break at 0.9619.
Overall EUR/USD trades 1.0439 to 1.0034 and USD/CHF 0.9619.
GBP/USD 1.2321 waits fo higher GBP. GBP/CAD is oversold from 1.5826. Recall FX weekly and higher for GBP/CAD. GBP/CAD traded 200 pips higher this week. GBP/NZD remains a problem pair and GBP/AUD trades at the mercy of AUD/USD.
Overbought AUD/USD big break is located at 0.6992. NZD/USD 0.6354 waits to trade higher.
Oversold EUR/CAD at week’s beginning traded 200 pips higher and remins deeply oversold.
USD/CAD 1.2852 for higher. Higher is guaranteed if CAD/JPY breaks below 102.96.
EUR/AUD trades massively oversold and good longs for next week. From 1.4500;s, good target is 1.4700’s.
EUR/AUD is the best trade against GBP/AUD and EUR/NZD better than GBP/NZD.
Severely overbought AUD/EUR explains AUD/USD to break 0.6992.
DXY 106.50’s for higher to target 107.00’s.
Currencies for 2000 years are characterized either as Gold or Silver currencies and the connection was established in antiquity. The connection in the modern day can’t ever change.
Silver currencies are the lesser valued 0 point currencies. Asia, central and South America are classified as Silver currencies. Mexico is a Silver Currency.
USD, Europe and Canada are Gold Currencies and classified by their 1.0 exchange rate designation.
If the Gold/Silver ratio is high or at a vital level then the effect is seen from Gold Currencies as Gold currencies will also trade at a vital MA point.
Gold on its best days over the past 3 and 4 weeks traded 30 ish points while EUR/USD traded 100 ish pips and a difference of 70 ish points.
Silver traded 1 point yesterday Vs 120 pips for JPY/USD 0.7545 to 0.7424. Weekly Silver traded 2 points from 20.22 to 18.21 vs JPY/USD 276 pips from 0.7545 to 0.7269.
For every 1 point traded in Silver, JPY/USD trades 100 ish pips. Best to convert exchange rates to work with smaller numbers.
Gold and EUR/USD work the exact same as Silver to Silver currencies such as JPY/USD. Roughly 30 points to Gold trades 100 ish pips for EUR/USD.
Not much will ever change in the Silver Vs Silver currency ratios nor Gold to Gold Currencies as the relationhsips were established 2000 years ago.
If the Gold /Silver ratio relationship is extremely low to Silver then Silver currencies go long as all are oversold. If Gold is high then short Gold Currencies as Gold currencies are overbought.
Daily recommendations on major – USD/JPY
USD/JPY – 132.81
Dollar’s selloff partly in tandem with US yields and negative US GDP as well as market chatter of heavy unwinding of long usd positions to a 5-week 134.21 in New York yesterday, then intra-day sharp drop to 132.51 in European morning suggests decline from July’s 24-year 139.39 peak may yield 132.35, 131.50
On the upside, only a daily close above 133.71 would signal a temporary low is in place and stronger retracement to 134.10/20 would be seen next week.
Data to be released on Friday
France consumer spending, GDP, Germany GDP, import prices, unemployment change, unemployment rate, UK nationwide house price, Swiss retail sales, KOF indicator, France CPI, Italy GDP, CPI, EU HICP.
U.S. personal income, personal spending, PCE price index, employment wages, employment costs, Chicago PMI, University of Michigan sentiment, Canada GDP and budget balance.