JLS: Major FX Prices by Fed, ECB, BOJ, SNB, BoE, BoC, RBA & RBNZ
Major currency pairs (USD-pegged pairs) are priced by the Fed, ECB, BoJ, SNB, BoE, BoC, RBA and RBNZ by using the same guideline and procedure for the assessment and measurement of FX prices by the rule of thumb of "equilibrium exchange rate theory" and "target zone theory" by using the same tool and practice of "currency band theory". These are the official theories, policies, regulations and practices inserted and endorsed by the international monetary system supervised and monitored by the IMF/BIS and the US Treasury.
The assessment and the measurement of the major currency pairs' prices and their target zones are the "fondation" for the assessment and the measurement of their derivatives (cross rates) prices made by the global players at OTC derivative markets. Derivatives or cross rates are by products of major pairs, thus should the prices of major pairs to be measurable and then the prices of their derivatives become measurble. Under pricing and over-pricing on derivative market compressed by the Traiana and TriOptima to match their fundamental prior to settlement made by the CLS bank at the requisition of their members.
At current interest rate differential structures as or March 2019, major currencies (NZD, CAD, AUD, GBP, EUR, JPY & CHF) is depreciated by the USD by their interest rate differentials interior their measured "exchange rate target zones". At such, by rule of thumb, the USD-pegged pairs move from their equilibrium exchange rate at economic fundamental (disequilibrium) to their equilibrium exchange rate at interest rate differentials (equilibrium) interior their mesured "exchange rate target zones". At such, their pricing are "ceiled" or "limited" by their measured target zones. The management of the measured target zones represent the credibility of the central banks agreedd by the Plaza, Louvre and EMS treaty/agreements/accord. This result the major currency pairs to be freely fluctuated interior their measured target zones driven by the trading activity in the market.
If and when one or two major currency pairs have reached their upper ceilings then those pairs turned to their lower ceilings and the opposite, if and when one or more major currency pairs have reached their lower ceilings then those pairs turned to their upper ceilings. This process continuoulsy repeated unless the width (wide) of the measured target zones to be revised (wider or narrower) by their economic fundamentals, and or their upper and lower ceilings to be aligned and re-aligned by the changes on their interest rate differentials as the result of interest rate increases and decreases by the central banks.
The current prices of USDJPY and USDCHF have reached their upper bands/ceilings and those pairs turned to their lower ceilings and at the same time the major currency pairs NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD not to reach their lower ceilings yet. At such, the CHF-pegged pairs (NZDCHF, CADCHF, AUDCHF, GBPCHF and EURCHF) turned to move to downward as well as the JPY-pegged pairs (NZDJPY, CADJPY, GBPJPY, EURJPY) turned to downward. Their movement to downward will continue until they reach their lower bands/ceilings and their lower bands/lower ceilings are the measures of USDJPY target zones versus NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD target zones and the measures of USDCHF target zones versus NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD target zones. At such, the assessment and the measurement of the target zones of the major currency pairs (USDCHF, USDJPY, NZDUSD, CADUSD, AUDUSD, GBPUSD and the EURUSD) is the primary measures for measuring the target zones of their derivatives/cross rates.
Therefore, it could be summarized that:
USD-pegged pairs,
NZDUSD, CADUSD, AUDUSD, GBPUSD, EURUSD move from their "disequilibrium to equilibrium"
USDCHF, USDJPY move from their "equilibrium to disequilibrium"
CHF-pegged pairs:
USDCHF, NZDCHF, CADCHF, AUDCHF, GBPCHF, EURCHF move from their "equilibrium to disequilibrium"
JPY-pegged pairs:
USDJPY, NZDJPY, CADJPY, AUDJPY, GBPJPY, EURJPY move from their "equilibrium to disequilibrium"
The likely question is EUR-pegged pairs, EURNZD, EURCAD, EURAUD and EURGBP. Their prices are based on the EURUSD target zone and the target zones of the NZDUSD, CADUSD, AUDUSD and GBPUSD and those pairs (NZDUSD, CADUSD, AUDUSD, GBPUSD as well as EURUSD) are collectively to move from their "disequilibrium to equilibrium". Thus, the prices of EURNZD, EURCAD, EURAUD and EURGBP will be turned to their upper ceilings if and when the EURUSD already reach her lower ceiling and those pairs are still underway to their lower ceilings, and/or their prices will be turned to upward if and when the "depreciation rates" by the USD on the NZD, CAD, AUD and GBP is "higher" than the depreciation rate by the USD on EUR.
Thus, the "currency band" represents the managed prices of collective currency pairs interior their target zones based on the structure of:
Upper Bands/Upper Ceilings/Upper Target Zone
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USD: USDCHF, USDJPY, NZDUSD, CADUSD, AUDUSD, GBPUSD, EURUSD
CHF: USDCHF, NZDCHF, CADCHF, AUDCHF, GBPCHF, EURCHF
JPY: USDJPY, NZDJPY, CADJPY, AUDJPY, GBPJPY, EURJPY
EUR: EURNZD, EURCAD, EURAUD, EURGBP
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Lower Bands/Lower Ceilings/Lower Target Zones
Thus, FX prices not priced individually but collectively. This is the "main difference" between currency band method and technical method by using individual technical chart.
The assessment and the measurement of the major currency pairs' prices and their target zones are the "fondation" for the assessment and the measurement of their derivatives (cross rates) prices made by the global players at OTC derivative markets. Derivatives or cross rates are by products of major pairs, thus should the prices of major pairs to be measurable and then the prices of their derivatives become measurble. Under pricing and over-pricing on derivative market compressed by the Traiana and TriOptima to match their fundamental prior to settlement made by the CLS bank at the requisition of their members.
At current interest rate differential structures as or March 2019, major currencies (NZD, CAD, AUD, GBP, EUR, JPY & CHF) is depreciated by the USD by their interest rate differentials interior their measured "exchange rate target zones". At such, by rule of thumb, the USD-pegged pairs move from their equilibrium exchange rate at economic fundamental (disequilibrium) to their equilibrium exchange rate at interest rate differentials (equilibrium) interior their mesured "exchange rate target zones". At such, their pricing are "ceiled" or "limited" by their measured target zones. The management of the measured target zones represent the credibility of the central banks agreedd by the Plaza, Louvre and EMS treaty/agreements/accord. This result the major currency pairs to be freely fluctuated interior their measured target zones driven by the trading activity in the market.
If and when one or two major currency pairs have reached their upper ceilings then those pairs turned to their lower ceilings and the opposite, if and when one or more major currency pairs have reached their lower ceilings then those pairs turned to their upper ceilings. This process continuoulsy repeated unless the width (wide) of the measured target zones to be revised (wider or narrower) by their economic fundamentals, and or their upper and lower ceilings to be aligned and re-aligned by the changes on their interest rate differentials as the result of interest rate increases and decreases by the central banks.
The current prices of USDJPY and USDCHF have reached their upper bands/ceilings and those pairs turned to their lower ceilings and at the same time the major currency pairs NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD not to reach their lower ceilings yet. At such, the CHF-pegged pairs (NZDCHF, CADCHF, AUDCHF, GBPCHF and EURCHF) turned to move to downward as well as the JPY-pegged pairs (NZDJPY, CADJPY, GBPJPY, EURJPY) turned to downward. Their movement to downward will continue until they reach their lower bands/ceilings and their lower bands/lower ceilings are the measures of USDJPY target zones versus NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD target zones and the measures of USDCHF target zones versus NZDUSD, CADUSD, AUDUSD, GBPUSD and EURUSD target zones. At such, the assessment and the measurement of the target zones of the major currency pairs (USDCHF, USDJPY, NZDUSD, CADUSD, AUDUSD, GBPUSD and the EURUSD) is the primary measures for measuring the target zones of their derivatives/cross rates.
Therefore, it could be summarized that:
USD-pegged pairs,
NZDUSD, CADUSD, AUDUSD, GBPUSD, EURUSD move from their "disequilibrium to equilibrium"
USDCHF, USDJPY move from their "equilibrium to disequilibrium"
CHF-pegged pairs:
USDCHF, NZDCHF, CADCHF, AUDCHF, GBPCHF, EURCHF move from their "equilibrium to disequilibrium"
JPY-pegged pairs:
USDJPY, NZDJPY, CADJPY, AUDJPY, GBPJPY, EURJPY move from their "equilibrium to disequilibrium"
The likely question is EUR-pegged pairs, EURNZD, EURCAD, EURAUD and EURGBP. Their prices are based on the EURUSD target zone and the target zones of the NZDUSD, CADUSD, AUDUSD and GBPUSD and those pairs (NZDUSD, CADUSD, AUDUSD, GBPUSD as well as EURUSD) are collectively to move from their "disequilibrium to equilibrium". Thus, the prices of EURNZD, EURCAD, EURAUD and EURGBP will be turned to their upper ceilings if and when the EURUSD already reach her lower ceiling and those pairs are still underway to their lower ceilings, and/or their prices will be turned to upward if and when the "depreciation rates" by the USD on the NZD, CAD, AUD and GBP is "higher" than the depreciation rate by the USD on EUR.
Thus, the "currency band" represents the managed prices of collective currency pairs interior their target zones based on the structure of:
Upper Bands/Upper Ceilings/Upper Target Zone
-----------------------------------------------------------------------------------
USD: USDCHF, USDJPY, NZDUSD, CADUSD, AUDUSD, GBPUSD, EURUSD
CHF: USDCHF, NZDCHF, CADCHF, AUDCHF, GBPCHF, EURCHF
JPY: USDJPY, NZDJPY, CADJPY, AUDJPY, GBPJPY, EURJPY
EUR: EURNZD, EURCAD, EURAUD, EURGBP
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Lower Bands/Lower Ceilings/Lower Target Zones
Thus, FX prices not priced individually but collectively. This is the "main difference" between currency band method and technical method by using individual technical chart.