Thanks for clarifying that Slug, Kuzia.slugFX said:I also believe that higher yield = bullish FX. Basically which ever direction that yield goes is where EUR/USD & GBP/USD should go. They are positively correlated.
I got this information from ICT's Trading Plan Development Series Part 1. It is a very long one, but it is a gem!
So it appears that I had the correlation upside down due to an ICT slide that said:
"Bearish Conditions = Interest rates are moving lower - Market Shuns lower yield"
If something is "shunned" I thought it meant "staying away from or avoided" in other words the yield would be moving higher.
Boy has the definition of that word wreaked havoc with my trading lately!
Thanks again Slug & Kuzia for clearing that up!
PS. Any thoughts on my more recent post regarding strength in the bonds?
sinsemilla said:Can anyone explain what the bond yields are indicating?
To me they look as though theyre about to breakout to the upside which would equate to a risk on scenario for FX if Im not mistaken?
That said, they have diverged slightly with the UK yield making a higher high so could this indicate weakness in FX?
In Addition, the 5 year T note appears bullish in that the commercials have increased net long position (COT) also the net open interest has declined as the market fell indicating strength.
Does this add up to further risk off expectation in FX? ie. Bonds in demand = Interest rates lower)