FX next week: Recession, NBER, trades
|EUR/NZD achieved the 1.7400's target from 1.8200's while GBP/NZD completed target at 2.0200's from 2.0900. Trade duration was 22 days and 800 pips or 1600 total.
The NBER definition of Recession in found in Economic peaks and troughs. NBER views peaks and troughs as cycles identified from Indicators as real personal income less transfers (PILT), nonfarm payroll employment, real personal consumption expenditures, wholesale-retail sales adjusted for price changes, employment as measured by the household survey, and industrial production.
However, declines in real PCE usually account for only a small part of the declines in real GDP. Beside PCE, NBER indicators are slow and late term and react after recession began. NBER assumes in my estimation, Economic indicators are specific to the United States.
Today is different as one world economy exists. Every nation in the past 3 years suffered lower GDP and Money Supplies and higher Inflation and Interest rates.
Recession is the determination of GDP and Money supplies vs Inflation and Interest rates. Either side of the equation is the exact same as GDP = Money Supplies and Inflation = Interest rates. Same as saying GDP = Interest rates and money supplies = Inflation. All apply equally to every nation.
From a market perspective, Powell arrived with the 3M and 10 year not inverted. Volker arrived with the 3M and 10 year not inverted. Aurther Burns from 1970 - 1978 arrived with the 3M and 10 year not inverted. Under William McChesny Martin 1951 to 1970, the 3M and 10 year wasn't inverted.
All Fed chairman caused Inflation to travel higher and GDP and money supplies lower by fighting Inflation to higher Interest rates. All failed as each instance of higher Inflation lasted easily 3 years and lasting economic slowdown. The 3M to 10 year inversions also lasted 3 years.
All Fed chairs fought Inflation head on as the primary focus while Inflation is a subordinate Indicator to Interest rates and GDP. They fought the wrong battle.
Next week
EUR/USD trades from 1.0870 to 1.1053. EUR/USD at 1.0900's trades deeply overbought. Next above 1.0946, 1.0959 and 1.0972. Break 1.0870 targets 1.0824. EUR/USD long term targets 1.0974 and the top of a multi year channel.
GBP/USD Lower must break 1.2568 and current ranges from 1.2568 to 1.2780. GBP/USD also trades deeply overbought. The upper level from a multi year perspective is located at 1.2665. GBP/USD targets 1.2557 and 1.2480.
NZD/USD trades 0.6262 to 0.6075. Above 0.6262 targets 0.6297 and 0.6403. Lower targets 0.6144 and 0.6110.
AUD/USD trades from 0.6552 to 0.6759. Next long term targets above 0.6748 and 0.6883. Lower target 0.6609 and 0.6595.
Maintain focus to AUD trades as AUD/USD will move well over next weeks.
USD/JPY next lower target 138.01. USD/JPY remains deeply overbought as well as all JPY cross pairs.
For 2024 is the same as 2023, USD/JPY and JPY cross pairs will trade not only far and wide but result in many profitable trades.
USD/JPY at 141.68 bottoms at 141.47. Longs target 143.36, 144.30 and 144.77. USD/JPY's big line for higher at 146.19 is dropping by the day and this line is not expected to break higher anytime soon.
The BOJ intervention is a moot point as the BOJ won't intervene nor are Japanese officials to comment on current levels.
Deeply oversold GBP/JPY and EUR/JPY targets 181.23 and 156.15, CAD/JPY 106.74. Notrhing special at all exists to AUD/JPY and NZD/JPY.
Recall AUD/JPY and NZD/JPY long term targets: AUD/JPY: 95.49, 92.22, 90.78, 89.91. NZD/JPY: 88.58, 85.51, 83.98, 82.83.
GBP/JPY, EUR/JPY and CAD/JPY
as GBP/JPY: 181.06, 172.87, 168.89, 167.40. EUR/JPY: 157.78, 150.05, 145.89, 143.39. CAD/JPY: 107.74, 102.97, 100.21, 98.59.
The big 3 trades are GBP/JPY, EUR/JPY and CAD/JPY.
Deeply oversold EUR/AUD trades just above vital 1.6103 and expected to hold for many weeks. Higher targets easily 1.6399.
GBP/AUD trades massive oversold just above 1.8614. GBP/AUD is far more oversold than EUR/AUD and is the better trade. GBP/AUD targets easily 1.9067.
Deeply oversold EUR/NZD targets 1.7628 and 1.7705 while GBP/NZD trades just above vital 2.0100's and targets 2.0504.
For 28 currency pairs, 14 are worth the trouble to offer good profits.
SPX 500
Remember2 weeks ago, overbought high 4600's, low 4700's. We're here. Next trade = Shorts below 4727 to break 4653.31 to target 4579.4.
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