finitemonk

Borrowing Cost / Interest Rates / Currency Markets

INDEX:TNX   10-Year Treasury Note
This is probably the most important chart as far as the currency markets go, bond charts that is.

Black - TNX             (10yr Treasury Note (US))
Red - EuroBunds (Inverted)
(The differential between the two is, as far as I can see often reflected in the EURUSD             )
i suspected most bond rate charts are the same.

The little upward zig-zag , right at the end was again reflected in say the EURUSD             .

It would appear from an EW perspective that borrowing costs / bond markets are in a wave C, and towards the end of it, with each wave as a standard zig-zag . Here, now, IF and IF my wave count is correct, (and I'm not wholly convinced it is) in a wave (iv) ??? where they will drop again, before going back up, and then finally drop again for the final time.

But what I think is the most significant aspect, is that as the pressure of compression as expressed in a triangle increases, it will be those currencies which have the lowest CB             interest rates which will be most "vulnerable" to the bond markets. That is to say those with NIRP/ZIRP will revalue the fastest, against those with higher interest rates.

Commonly traded currencies / CB             Interest Rates - in this order:

1. CHF: - 0.75%
2. EUR: 0.05%
3. JPY: 0.1%
4. USD: 0.25%
5. GBP: 0.5%
6. CAD: 0.75%
7. AUD: 2%
8. NZD: 3.5%

Anyone trading the EURNZD             recently made a tidy sum. Although no doubt there is a symbiosis between the currency markets and bond markets, I think probably the bond to currency is the more powerful, and the recent rise of EUR vs. NZD is as bond rates push the lower against the higher.

The widowmakers trade may yet make a killing yet not make a widow.
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