15-100% per anno

USDX
GBPUSD, Daily, 2013 Mai 2013
In this example the USDX indicator could deliver one more probability pattern besides the most important CCI indicator.
In special market environments by monitoring as a CCI-Divergence in correspondance with a CCI/USDX-span you could invest money into the market with higher risk.
(See further Post# 499, please).

some thoughts on the bond markets and why market prices generally are probably about to be dictated by what happens to yields for US 10 and 30 Year Treasuries and also JGBs........

i think Krasting covers the critical issues involved and the takeaway appears pretty much in line with what Kyle Bass and AEP have written about how the FED and BOJ must crush opposition to higher yields, and or raids on the bond markets by vigilante hedge funds....

the metric to watch for is US 10 Year Treasury yields rising to 2.20%..... first highside.......then to 2.5%........this number would under normal circumstances drive uj much higher, but as Krasting points out it is probable that the FED then intervenes with a sudden massive increase in QE using 'adjustment' as a rationale for a larger than normal intervention to again repress interest rates creating a huge buying opportunity for bonds of all stripes (the FED governors have alluded to this possibility in recent speeches)

to be continued.........


http://www.zerohedge.com/contributed...d-vortex-works

MMMMMMMMMMMmmmmmmmmmmmmmmmm.. Thks

http://www.investopedia.com/articles.../05/041305.asp

Bond Spreads: A Leading Indicator For Forex
March 31 2010
by Kathy Lien

The global markets are really just one big interconnected web. We frequently see the prices of commodities and futures impact the movements of currencies, and vice versa. The same is true with the relationship between currencies and bond spread (the difference between countries' interest rates): the price of currencies can impact the monetary policy decisions of central banks around the world, but monetary policy decisions and interest rates can also dictate the price action of currencies. For instance, a stronger currency helps to hold down inflation, while a weaker currency will boost inflation. Central banks take advantage of this relationship as an indirect means to effectively manage their respective countries' monetary policies.

By understanding and observing these relationships and their patterns, investors have a window into the currency market, and thereby a means to predict and capitalize on the movements of currencies.

What Does Interest Have to Do With Currencies?
To see how interest rates have played a role in dictating currency, we can look to the recent past. After the burst of the tech bubble in 2000, traders went from seeking the highest possible returns to focusing on capital preservation. But since the U.S. was offering interest rates below 2% (and going even lower), many hedge funds and those who had access to the international markets went abroad in search of higher yields. Australia, with the same risk factor as the U.S., offered interest rates in excess of 5%. As such, it attracted large streams of investment money into the country and, in turn, assets denominated in the Australian dollar.

These large differences in interest rates led to the emergence of the carry trade, an interest rate arbitrage strategy that takes advantage of the interest rate differentials between two major economies, while aiming to benefit from the general direction or trend of the currency pair. This trade involves buying one currency and funding it with another, and the most commonly used currencies to fund carry trades are the Japanese yen and the Swiss franc because of their countries' exceptionally low interest rates. The popularity of the carry trade is one of the main reasons for the strength seen in pairs such as the Australian dollar and the Japanese yen (AUD/JPY), the Australian dollar and the U.S. dollar (AUD/USD), the New Zealand dollar and the U.S. dollar (NZD/USD), and the U.S. dollar and the Canadian dollar (USD/CAD). (Learn more about the carry trade in The Credit Crisis And The Carry Trade and Currency Carry Trades Deliver.)

However, it is difficult for individual investors to send money back and forth between bank accounts around the world. The retail spread on exchange rates can offset any additional yield they are seeking. On the other hand, investment banks, hedge funds, institutional investors and large commodity trading advisors (CTAs) generally have the ability to access these global markets and the clout to command low spreads. As a result, they shift money back and forth in search of the highest yields with the lowest sovereign risk (or risk of default). When it comes to the bottom line, exchange rates move based upon changes in money flows.

The Insight for Investors
Individual investors can take advantage of these shifts in flows by monitoring yield spreads and the expectations for changes in interest rates that may be embedded in those yield spreads. The following chart is just one example of the strong relationship between interest rate differentials and the price of a currency.


http://i.investopedia.com/inv/articl...ndSpreads1.GIF
Figure 1

Notice how the blips on the charts are near-perfect mirror images. The chart shows us that the five-year yield spread between the Australian dollar and the U.S. dollar (represented by the blue line) was declining between 1989 and 1998. This coincided with a broad sell-off of the Australian dollar against the U.S. dollar.

When the yield spread began to rise once again in the summer of 2000, the Australian dollar responded with a similar rise a few months later. The 2.5% spread advantage of the Australian dollar over the U.S. dollar over the next three years equated to a 37% rise in the AUD/USD. Those traders who managed to get into this trade not only enjoyed the sizable capital appreciation, but also earned the annualized interest rate differential. Therefore, based on the relationship demonstrated above, if the interest rate differential between Australia and the U.S. continued to narrow (as expected) from the last date shown on the chart, the AUD/USD would eventually fall as well. (Learn more in A Forex Trader's View Of The Aussie/Gold Relationship.)

This connection between interest rate differentials and currency rates is not unique to the AUD/USD; the same sort of pattern can be seen in USD/CAD, NZD/USD and the GBP/USD. Take a look at the next example of the interest rate differential of New Zealand and U.S. five-year bonds versus the NZD/USD.


http://i.investopedia.com/inv/articl...ondSpreads.GIF
Figure 2

The chart provides an even better example of bond spreads as a leading indicator. The differential bottomed out in the spring of 1999, while the NZD/USD did not bottom out until the fall of 2000. By the same token, the yield spread began to rise in the summer of 2000, but the NZD/USD began rising in the early fall of 2001. The yield spread topping out in the summer of 2002 may be significant into the future beyond the chart. History shows that the movement in interest rate difference between New Zealand and the U.S. is eventually mirrored by the currency pair. If the yield spread between New Zealand and the U.S. continued to fall, then one could expect the NZD/USD to hit its top as well.

Other Factors of Assessment
The spreads of both the five- and 10-year bond yields can be used to gauge currencies. The genereal rule is that when the yield spread widens in favor of a certain currency, that currency will appreciate against other currencies. But, remember, currency movements are impacted not only by actual interest rate changes but also by the shift in economic assessment or plans by a central bank to raise or lower interest rates. The chart below exemplifies this point.

http://i.investopedia.com/inv/articl...dSpreads3A.GIF
Figure 3

According to what we can observe in the chart, shifts in the economic assessment of the Federal Reserve tend to lead to sharp movements in the U.S. dollar. The chart indicates that in 1998, when the Fed shifted from an outlook of economic tightening (meaning the Fed intended to raise rates) to a neutral outlook, the dollar fell even before the Fed moved on rates (note on Jul 5, 1998, the blue line plummets before the red one). The same kind of movement of the dollar is seen when the Fed moved from a neutral to a tightening bias in late 1999, and again when it moved to an easier monetary policy in 2001. In fact, once the Fed just began considering lowering rates, the dollar reacted with a sharp sell-off. If this relationship continued to hold into the future, investors might expect a bit more room for the dollar to rally.

When Using Interest Rates to Predict Currencies Will Not Work
Despite the tremendous amount of scenarios in which this strategy for forecasting currency movements does work, it is certainly not the Holy Grail to making money in the currency markets. There are a number of scenarios in which this strategy may fail:

1. Impatience
   As indicated in the examples above, these relationships foster a long-term strategy. The bottoming out of currencies may not occur until a year after interest rate differentials may have bottomed out. If a trader cannot commit to a time horizon of a minimum of six to 12 months, the success of this strategy may decrease significantly. The reason? Currency valuations reflect economic fundamentals over time. There are frequently temporary imbalances between a currency pair that can fog up the true underlying fundamentals between those countries.
2. Too Much Leverage
   Traders using too much leverage may also not be suited to the broadness of this strategy. Since interest rate differentials tend to be fairly small, traders accustomed to using leverage may want to use it to increase. For example, if a trader used 10 times leverage on a yield differential of 2%, it would turn 2% into 20%, and many companies offer up to 100 times leverage, tempting traders to take a higher risk and attempt to turn 2% into 200%. However, leverage comes with risk, and the application of too much leverage can prematurely kick an investor out of a long-term trade because he or she will not be able to weather short-term fluctuations in the market.
3. Equities Become More Attractive
   The key to the success of yield-seeking trades in the years since the tech bubble burst was the lack of attractive equity market returns. There was a period in early 2004 when the Japanese yen was soaring despite a zero-interest policy. The reason was that the equity market was rallying, and the promise of higher returns attracted many underweighted funds. Most large players cut off exposure to Japan over the previous 10 years because the country faced a long period of stagnation and offered zero interest rates. Yet, when the economy showed signs of rebounding and the equity market began to rally once again, money poured back into Japan regardless of the country's continued zero-interest policy. This demonstrates how the role of equities in the capital flow picture could reduce the success of bond yields forecasting currency movements.
4. Risk Environment
   Risk aversion is an important driver of forex markets. Currency trades based on yields tend to be most successful in a risk-seeking environment and least successful in a risk-averse environment. That is, in risk-seeking environments, investors tend to reshuffle their portfolios and sell low-risk/high-value assets and buy higher-risk/low-value assets. Riskier currencies - those with large current account deficits (which you can learn more about here) - are forced to offer a higher interest rate to compensate investors for the risk of a depreciation that is sharper than the one predicted by uncovered interest rate parity. The higher yield is an investor's payment for taking this risk.
   
   However, in times when investors are more risk averse, the riskier currencies - on which carry trades rely for their returns - tend to depreciate. Typically, riskier currencies have current account deficits and, as the appetite for risk wanes, investors retreat to the safety of their home markets, making these deficits harder to fund. It makes sense to unwind carry trades in times of rising risk aversion, since adverse currency moves tend to at least partly offset the interest rate advantage.
   
   Many investment banks have developed measures of early warning signals for rising risk aversion. This includes monitoring emerging-market bond spreads, swap spreads, high-yield spreads, forex volatilities and equity-market volatilities. Tighter bond, swap and high-yield spreads are risk-seeking indicators while lower forex and equity-market volatilities indicate risk aversion.

Conclusion
Although there may be risks to using bond spreads to forecast currency movements, proper diversification and close attention to the risk environment will improve returns. This strategy has worked for many years and can still work, but determining which currencies are the emerging high-yielders versus which currencies are the emerging low-yielders may shift with time.

GBPHKD, Monthly, 2013 Mai 26

thanks for posting that information, Cube

Kuroda indicated today that JGBs can rise 1 to 3%.........(a sell for JGBs as 10yrs are under/at 1% already up from the lows around 4/10ths)(not certain whether this is a positve for US and EZ paper as US 10s are likely to be capped at 2.2 to 2.5%)

my bias is this indication by Kuroda that JGBs yields can rise to 3% caps u/j for the time being..........may be wrong but my 2 cents

here is a graph form an article by ZH on the relative size of US and Japanese equity and bond markets.....

http://www.zerohedge.com/news/2013-05-26/when-herding-cats-fails-visual-tale-two-qes

http://www.zerohedge.com/sites/defau...0Japan_1_0.jpg

Actual
Order Book
2013 Mai 27

2012 Mai 27, 10:03 CEST
Equity: +2'298.36,
Profit: +53.2%
since 2013 April 05

...the same logic like Post# 501

USDX
EURUSD, Weekly, 2013 Mai 27

...the USDX is comprised of more than 50% by the euro zone, EUR/USD is quite inversely related
Read more: http://www.babypips.com/school/using...#ixzz2UV0eS9pO

Market Situations A & C deliver good tading situations, Point B seems with the added CCI divergence an excellent one.
I would trade Point B with higher risk (more Lots), having said that A & C would give me furthermore good investments.
Maybe it could be better to wait for a weekly divergence at C (which isn't shaped now) or go Long yet and when the price would go more down reinvest your money in Longs once again at lower prices.

It's like a mirror image! If one goes up, the other most likely goes down. Will you look at that? It seems like the trend lines almost inversely match up perfectly. This could be a big help to those big on trading EUR/USD.
Read more: http://www.babypips.com/school/using...#ixzz2UV13xXA8

FXcube

___
USDX Indiator, see Post# 512, please.

USDX
I preferre to trade the CCI/USDX-span at EURUSD weeklys' charts & the GBPUSD predomoinantly at the dailys' ones, but first of all I take a look at the important and reliable CCI-Indicator. Why? I use the CCI indicator since over 10 years. I became familiar with him.
FXcube

EURUSD, Daily, 2013 Mai 27
I try to scalp inside the triangle and will go Long or Short outside the box with the expectation of more powerful Longs.
Medium term trades: 1st target @ 1.3024 (DR2)

USDX Indicator
see attachment, please.

USDX
Here are two little tips you should always remember:
If USD is the base currency (USD/XXX), then the USDX and the currency pair should move the same direction.
If USD is the quote currency (XXX/USD), then the USDX and the currency pair should move in opposite directions.
Read more: http://www.babypips.com/school/using...#ixzz2UV21jYhB

see Post# 505
GBPHKD, Long @ 11.722, Target @ 12.500

EURUSD, H1, 2013 Mai 28
Long @ 1.2862

Trades Today
2013 Mai 29
Profit: +87.54$
+5.8%

Closed Trades Today
2013 Mai 30
Profit: +125.07$
+8.3%

Actual
Open Order Book

2012 Mai 30, 11:20 CEST
Equity: +2'378.54$,
Profit: +58.5%
since 2013 April 05

1. Post# 511

EURUSD, M30, 2013 Mai 30
1st target is reached.