The European and commodity currencies open on a generally firm tone in the Far East after rallying since Thursday on expectations that Greece will secure the EU OK for the debt swap early this week. The Eurozone finance ministers will probably approve a second bailout for Greece, even though the Greek government will still fall short of expectations. As I have repeatedly warned you, no local government will be able to change the Greek culture, the appetite for undemanding, secure and benefit-rich government jobs, or properly collect taxes. Therefore, the Greek problems will perpetuate long after the EU, ECB and IMF lets this peripheral off the hook.

The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long most the European and commodity currencies, and short yen and Aussie.


Overnight:

  • US: The consumer price index rose by 0.2% in January after coming in unchanged in December. The core CPI also rose by 0.2% in January.

  • US: The Conference Board’s leading economic index rose by 0.4% in January following a revised 0.5% increase in December.

  • Canada: Consumer prices rose 0.5% in January.

  • Canada: Leading indicators rose 0.7% in January, the same as in December.

  • China: The People's Bank of China has decided to cut the banks' reserve requirement rate by 50 basis points to 20.5% to boost lending amid sluggish economic growth.

  • Japan: Merchandise trade balance showed a trade deficit of 1.475 trillion yen in January following the downwardly revised deficit of 205.6 billion yen in December.

  • France: The confidence index for the manufacturing sector was unchanged at 92 in February.

  • Switzerland: Trade balance showed a surplus of 2.5 billion francs in January.

  • UK: Average asking prices for a property rose prices by 4.1% in February, the highest monthly increase since April 2002, following a 0.8% decline in January, Rightmove said.

  • UK: The gross value of mortgage lending declined 14% to GBP10.5 billion in January from GBP12.2 billion in December.


Today's economic calendar:

  • Australia: Leading index for December

  • Australia: Westpac Leading Index for December

  • China: HSBC manufacturing PMI for February


EUR – March

Luca Model: Long since February 17 (reversing short since February 14)

The March euro opens firmly in the Far East after bottoming near a three-week low on Thursday and hitting a one-week high on Monday. The 50% retracement of the January 17-February 9 rally supported well. The euro, which had peaked at a two-month high late last week, is trading again above the 21-day exponential moving average.

The short-term outlook is sideways. The medium-term outlook is sideways and my model went long short.

The 100-day exponential moving average resists at 1.3315. Further resistance is at 1.3405.

Initial support is at 1.3200. The 21-day exponential moving average supports at 1.3129. Further support is at 1.3045.

Net Non‐Commercial Positions: The short EUR position increased by 8,048 contracts to ‐148,641 contracts.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


JPY – March

Luca Model: Short since February 7

The oversold March Japanese yen has been falling since February 3 and hit a six-month low on Monday. It even surpassed the low of October 31, when the BoJ intervened and aggressively sold its currency before attempting to reverse. The short-term outlook is sideways. The medium-term outlook is bearish and my model is short.

Immediate resistance is at 1.2595. The next caps are 1.2695 and 1.2780.

A pivot low is at 1.2519. The next level is 1.2440.

Net Non‐Commercial Positions: The long JPY position decreased by ‐25,712 contracts to 29,459 contracts.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish (oversold)

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bearish

LONG-TERM: Sideways


GBP – March

Luca Model: Long since February 16 (reversing short since February 14)

The March pound opens off a 12-day high in the Far East after rallying aggressively since Thursday. It had peaked at a near three-month high in early February and branded a new low for the downtrend on January 13.

The short-term outlook is sideways. The medium-term outlook is slightly bullish and my model is long.

Initial resistance is at 1.5895. The top of the upmove is 1.5924. Further resistance is at 1.5975.

The 200-day exponential moving average supports at 1.5790 and the 21-day exponential moving average supports at 1.5731.

Net Non‐Commercial Positions: The short GBP position increased by ‐7,477 contracts to ‐40,599 contracts.

INDICATORS

Fast stochastics: Bullish (overbought)

MACD: Sideways

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Bearish


CHF – March

Luca Model: Long since February 20

The March Swiss franc opens off a 2 ½-month high in Asia after reversing losses since Thursday. The 100-exponential moving average caps on closing basis. The franc had marked a new low for the downtrend on January 9.

The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.

Initial resistance is at 1.1023. The 200-day exponential moving average caps at 1.1124.

Immediate support is at 1.0910. The 21-day exponential moving average supports at 1.0867. Distant support is at 1.0735.

Net Non‐Commercial Positions: The short CHF position increased by ‐6,068 contracts to ‐15,863 contracts.

INDICATORS

Fast stochastics: Bullish

MACD: Bearish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


CAD – March

Luca Model: Long since February 16 (reversing short since February 10)

The March Canadian dollar opens off a new high for the uptrend in the Far East. The loonie has been trading in a choppy uptrend since Thanksgiving.

The short-term outlook is sideways. The medium-term outlook is slightly bullish and my model is long.

A pivot high resists at 1.0090. Further resistance is at 1.0170.

Immediate support is at 1.0010. The 21-day exponential moving average supports at .9981 and the 200-day exponential moving average at .9927.

Net Non‐Commercial Positions: The long CAD position increased by 7,382 contracts to 9,566 contracts.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bearish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


AUD – March

Luca Model: Short since February 14 (reversing long since December 20)

The March Australian dollar opens off a 12-day high in Asia. It had formed a short-term top on February 8. The Aussie has been well entrenched in the uptrend since Thanksgiving, but is now challenging the rising trendline.

The short-term outlook is sideways. The medium-term outlook is bullish but my model is short.

The 21-day exponential moving average supports at 1.0601. Further support is at 1.0555.

The top of the uptrend is 1.0795. Further resistance is at 1.0830.

Net Non‐Commercial Positions: The long AUD position decreased by ‐1,354 contracts to 73,741 contracts.

INDICATORS

Fast stochastics: Sideways

MACD: Slightly bearish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Bullish