Thursday, March 9, 2017

First Look at Currencies

Recently, I've taken to the Currency Futures as a form to practice a few techniques I've been acquiring.   Nice thing about the Currencies is that they're global so it's usually easy to find a market that's displaying activity.

It didn't take long to rediscover that without understanding proper context, trading results are haphazard at best - So early this morning, I began an exercise to better frame currencies.

This is a survey of currency markets from a large overview perspective.   Precious metals are included.

Summary:   Many instruments are either currently at or forming major points of control (fair value) and likely to remain that way until some event causes imbalance.   In getting here, the US dollar has increased in value by 20% in the last 3 years while the rest of the world tanked.

Values are rounded to the nearest US nickel for simplicity.

The US Dollar is rising, presently at 1.01 from 0.80 in 2014 (+20%)

Looking at Gold & Silver, we find these near their 20 year Points of Control.   These fair value levels appear very well defined:

Australian Dollar: After  a defined fair price of 1.05 in 2011, value has declined around 0.75 (-25%)

British Pound: Forming fair value around 1.25, a 37% falloff from 2007 highs (~2.00)

Canadian Dollar: Forming fair value around 0.75, a 25% falloff from 2007 highs (~1.00)

Eurodollar:  Was around 1.30 , now around 1.10 (-15%)

Japanese Yen: Settling between 0.0085-0.0097, after a 40% drop from 0.0128

Mexican Peso.   Falling like a brick from 0.08 to 0.05 (-38%)