The Federal Deposit Insurance Corporation, in 12 CFR Final Rules, Parts 303 and 337, effective April 1, 2021, amended the concept of National Interest Rate Cap and National Interest Rate.
“The FDIC considers the ‘national rate’ to be the average of the rates paid by all deposit-taking institutions and insured credit unions for which data is available, with the rates weighted by each institution’s share of national deposits.”
“The “national rate cap” is calculated as the greater of: (1) the national rate plus 75 basis points; or (2) 120% of the current yield on US Treasury bonds of similar maturity plus 75 basis points The national rate cap for non-maturity deposits is the greater of the national rate plus 75 basis points or the federal funds rate plus 75 basis points.”
The national rate, speculatively speaking, is the money market interest rate at 0.08, which is the previous effective federal funds rate before the Fed hike. Add 75 basis points and the money market rate is capped at 0.83. The new effective funds rate is expected to be 0.20 or capped at 0.95.
The old savings rate at 0.06 is capped at 0.81 while the new savings rate is expected to be 0.18 and capped at 0.93. Savers for the first time in 15 years contain a chance to save and earn deposits.
Checking accounts and 1-month certificates of deposit at 0.03 are both capped at 0.79 for checks and 0.83 for CDs. The new rate per speculation is 0.15 and capped at 0.89 and 0.90.
CDs from 3 months to 60 months or 5 years are factored and pay interest from 0.06 to 0.28 current and capped from 1.01 to 2.69. The Treasury equivalent is between 0.22 and 1.62.
The CD issue is to hold periods for CD or Treasury returns to earn interest.
The FDIC, as regulator of banks, instituted the new 51-page rules along with historical background to allow banks to compete against less well-capitalized institutions and the rapidly changing electronic marketplace to move funds in a matter of minutes. seconds.
JP Morgan is forced to offer higher rates than a less well capitalized institution to drive the institution out of business. All bank deposit rates work by the same rules.
Speculation, the Fed at 25 basis points for each increase adheres to the principles of the national average and the national rate ceiling. Bullard can vote for a 50-point raise, but that will never happen in one meeting. We are limited to 25 point increases from today to eternity or when the Fed has had enough.
The UK banking system works as closely and competitively as the FDIC for interest payments.
When it comes to commercial paper rates and most 270-day holding periods are unprocessed, a spotty record of daily reports existed for the past several weeks. The imperative for non-financial commercial paper to approach offshore rates is to use the implied Libor rates while financial commercial paper for US money markets holds close to the effective federal funds rate.
EUR/USD near 1.1100 is midway between the 1.0900 low and the 1.1300 target. A close today around 1.1014 bodes well for next week. We’re long anyway, but a more perfect entry is the goal.
EUR/NZD vs 1.6500 target announced 2 weeks ago traded 1.6238 higher from 1.5900 lower. Currently oversold and long for next week.
EUR/AUD is 22 pips below its Sunday open at the current 1.4978.
EUR/CAD at 1.3957 is trading close to its Sunday open at 1.3907. Long for next week.
USD/JPY and JPY Cross Pairs
USD/JPY and EUR/JPY are determined by the 5-20-50 day short term averages. The shorter-term averages are the only remaining averages, as the remaining averages dated 1999 are heavily overbought.
USD/JPY at 119.00 and 120 is trading at extreme highs to short averages. The USD/JPY target remains 115.00, 114.00 then 113.00 and a short strategy only. Note the number 600 from 119 to 113.00.
Traveling against the tide. Note that current longer term targets are between 500 and 600 pips and this once every 2 year phenomenon currently exists and is a fabulous opportunity to accumulate many pips. The magic numbers for global currency trading are 2, 3, 4, 5, 6 and rarely 8.
Without detail, trust the in-depth research analysis of prior periods over the years. Since currency prices operate on IMM Futures over 3 months, targets will be achieved anywhere from that day up to 3 months at most. Normally goals reach for 1-2 months and not normal for 3 months.
The overall excellent and easy trading period, as we are currently doing, always hits in the period of February to May or March to June. And once every 2 years without fail. Again the number 2 for 2 years, 2 week cycle, 200 pip targets, 2 day average on Monday, divide 2 to get an average.
On the 5 and 600 pip targets, entry doesn’t matter, nor stops, charts and all the rest of the retail tools. This is a golden period for bank pips. When May and June trade, we return to range trades as the relationship between the anchor pair and the cross pair completely normalizes. All must work for the trades.
EUR/JPY is trading above its high at 129.00 and needs to come back down to 129.00. The extremes are located from low to middle 132.00 to low 133.00. EUR/JPY has historically traded between 132.00 and 134.00 for the past few years and has fallen significantly. No difference exists today.
CAD/JPY watch below as support remains at 89.00 and strong. AUD/JPY and NZD/JPY same principles as CAD/JPY, look below and hello 200 pips lower.
GBP/JPY as seen 2 weeks ago is between 148.00 and 158.00 and at 156.00 it is not only overbought but approaching its range highs. Short is the way to go.
GBP/CAD, GBP/AUD and GBP/NZD long, long next week and many weeks to come.
USD/CAD long, long for many weeks to come.
GBP/USD is approaching its 5-year average at 1.3166 against USD/CAD at 1.3007.
Note the range of exchange rates EUR/JPY 131.58, GBP/USD 1.3133 and USD/CAD 1.2606. GBP/USD and USD/CAD are oversold while EUR/JPY prices are too high. This relationship governs the next moves and EUR/JPY will lead the way.
AUD/USD and NZD are shown below.