Harmonically, US Interest Rates are Headed Toward 35%The US Interest Rate chart has been trading within a Descending Broadening Wedge and has recently broken out of the wedge. The target for a pattern like this is typically back to the inception of the pattern, which in this case would be 20%; but we also have an additional variable here, and that's the Potential Logscale Harmonic Formation we've made here. If we are to treat the action of this chart as we'd treat any other chart, then we'd expect that once B gets broken, we'd get an accelerated move all the way up to the Harmonic Completion of a Bearish Shark, which would land us at the 1.13/1.618 Harmonic Confluence Zone up at around 34-35%
There have been previous instances where Harmonics have had a predictive quality over data like this, such as the accelerated liquidity exit out of the reverse repo facility, the bond yield charts on multiple occasions, and the US Inflation Rate Charts. Which can all be seen in the related ideas tab if you are skeptical of my use of Harmonic Patterns in this context.
USINTR trade ideas
USINTR - still in a upside trend ( wth 30yr backtesting)
*High winning rate with backtesting by my strategy
Right now ECONOMICS:USINTR is still in the upside trend.
This means that it has been consistently performing poorly and may not be a good investment opportunity in the short term.
🔔 Be prepared for reversals.
It's advisable to be patient and wait for the downward trend to occur before the risk market confirms a bullish market again.
Good luck!
The correlation between US Interest Rates and The US Dollar (DXYInterest rates and USD strength are positively correlated.
An increase in US interest rates will typically result in a strengthening of the USD.
The reason is...
Foreign investors tend to flock to US assets, such as bonds and fixed bank rates for higher returns.
Higher demand for US assets drives up their price, and as a result, the USD strengthens.
As for the relationship between USD strength and US stock market prices, it is more complex and can have both positive and negative effects.
On one hand, a strong USD can make US exports less competitive, reducing demand and potentially leading to a decrease in corporate profits.
This can weigh on stock prices. On the other hand, a strong USD can attract foreign investment into US stocks, driving up demand and prices.
There are other reasons for the correlation such as:
Interest rate differentials
When interest rates in one country are higher than in another, capital tends to flow to the country with the higher interest rates.
This results in an increase in demand for the currency of the country with higher interest rates, strengthening its currency i.e US Dollar.
Inflation expectations
Interest rates are also closely linked to inflation expectations.
When interest rates rise, it is generally expected that inflation will rise too, which makes the currency more attractive to investors.
Trade flows
The USD is the currency used in most international trade transactions, and as a result, changes in trade flows can have a significant impact on the value of the USD.
230112- Relation (1) interest rate, (2) Treasury Yield, (3) oil U.S. INTEREST RATES vs TREASURY YIELD vs OIL PRICE
Timeframe: 1 month. start: 1972
Blue line: interest rates (USINT)
Orange area: 10-year U.S. Treasury Bond Yield (IRLTLT01USM156N)
Green Line: oil (scale on the left)
(A) WHEN INTEREST RATES ARE ABOVE BOND YIELD,
(1) it sparks a financial crisis: 1990, 2000, 2008, 2019
(2) it is followed by a spike in oil price.
(3) on smaller timescale, oil price rises and falls with increases and decreases in Treasury Yields.
(B) OBSERVATIONS ON INTEREST RATE:
(1) Interest Rates have been falling since 1980
(2) Treasury Yields have been declining since 1980
(3) It appears, the Federal Reserves strives for a 5% interest rate. It drops interest rates FAST when the market is too hot, and builds up slowly again, attempting to meat the 5% arbitrary target.
(4) As time goes on the Federal Reserve is more cautious in raising interest rates.
BUT MOST RECENT RAISES IN INTEREST RATE ARE ALL BUT SLOW.
s3.tradingview.com
Differences in central bank interest rates.The FED Interest rate is moving the stock market, but forex is more sensitive to the spreads.
In this simple aggregated chart, indexed to 100, several spreads between countries are shown.
For example, focus on the white continuous line, the US Dollar is more appetible for investor respect to Japanese Yen, because the UnitedStates has higher interest rate on its currency.
While, focusing on the red continuous line, the UnitedStates have the same interest rate of Canada. This means US Dollar and Canada Dollar have the same interest by investors in terms of interest on their currency. This means USD/CAD might be less dependant now from their central bank's monetary policies
Interest rate ( DOLLAR )How high will the Federal Reserve ( FED ) raise interest rates? Here you can see how far. As you can see we still have a long way to go. We are on the verge of breaking a congestion of more than 40 years.
The minimum rate hike will be up to 5 points. And that is at least, because we could revisit levels not seen since the 80s. We are in serious trouble, the economy of all citizens will suffer a lot. It is time to be cautious in the markets and not to make hasty decisions, as we may still have a long way to go before we see the end.
Interest Rates vs Everyone - How Crypto Can Bounce BackA pretty rough week for the markets - especially crypto. The recent dips are a result of mainstream money (crypto curious, but not necessarily dedicated) leaving the space as a response to inflation woes and the Federal Reserve planning to increase interest rates over 2022. The US housing markets are also set to slow down as well, possibly leading to a recession in the US markets and the global economy as a whole.
What's the silver lining? Well, the last time the housing market dipped was in 2008-2012, which coincides directly when Bitcoin itself was invented by Satoshi Nakamoto. Will the same sort of sentiment emerge as a result of fiat money crashing this time around? Time will tell.
Will the yen hit 150 against the greenback?The Japanese yen fell to a seven-year low of 125 against the US dollar on Monday as the Bank of Japan continued easing its monetary policy further widening the gap with the US Federal Reserve’s hawkish tone.
But instead of seeing it as a threat to the Japanese economy, the BOJ reiterated that a weaker yen would have positive effects on pushing Japan’s GDP higher.
BOJ’s divergence from Fed
The US central bank recently raised interest rates for the first time since 2018 and signalled more rate hikes in the coming months to tame rising inflation. The US consumer inflation rate skyrocketed to a four-year high of 7.9% in February, prompting the Fed to take a more hawkish stance despite the lingering COVID-19 pandemic and geopolitical uncertainties.
Conversely, the BOJ continued to loosen its monetary policy, reiterating that it would maintain interest rates at ultra-low levels to support Japan’s economic recovery and as inflation stays below its 2% target. The central bank also offered to purchase an unlimited amount of government bonds from Monday through Thursday this week at 0.25%.
The offer is for debts with maturities of more than five years and up to 10 years. The move is one of the BOJ’s attempts to contain rising bond yields despite US Treasury yields reaching new multi-year highs.
Adding pressure to the yen
The measure further weighed on the yen on Monday, with economists from ING Bank expecting upside risks to prevail beyond 125. They said "130 is well within reach in the near term unless the bond environment improves.”
A depreciation in the Japanese yen would drive up the costs of imports, ultimately hurting households as it would increase the costs of imported goods and other goods for consumption.
It also pushed Japan’s core inflation to a two-year high of 0.8% in March, quicker than market forecasts.
Preference for a weaker currency
While many economies beef up efforts to boost the value of their currencies, Japan has been aiming to devalue its currency to gain a competitive advantage in foreign trade. A weak yen will make Japan-made goods more competitive overseas and increase profits that Japanese companies make in foreign markets. It would also lift services exports and increase net income receipts from abroad when converted into yen.
Back in January, the BOJ estimated that a 10% drop in the yen would boost Japan’s gross domestic product by about 1%. In the final months of 2021, Japan’s GDP rose 4.6% year over year, lower than its previous forecast for a 5.4% rise. Fitch Ratings expects Japan’s inflation at 1.8% this year on the back of higher energy prices and yen depreciation.
Preventing another 1998 yen volatility
As the yen continues to fall against the greenback, the markets are closely watching for a recurrence of a wild rebound that occurred in the USDJPY in 1998 at the height of the Asian financial crisis. At the time, the US dollar fell by almost 15% versus the yen from its previous peak. That slump was preceded by a three-year yen depreciation as Japanese authorities believed the yen was overvalued.
Will the yen hit 150 against the greenback?
The question of whether the yen will reach 150 versus the US dollar is more of a when as the Fed maintains its hawkish stance and as the BOJ is poised to keep its loose monetary policy setting in the medium term. This would further widen the gap between their policies, sending the yen lower as Japan continues to book current account deficits due to a jump in oil import prices.