The financial markets are risk averse ahead of the US open amid fresh evidence of economic slowdown in China and the Eurozone. The European and commodity currencies open lower and the yen is marching higher after reversing aggressively from a near a one-month low the day before. The Asian stock indexes slipped. The European bourses are down and the US stock markets are lower in pre-open trading. Gold, oil and silver are down as well.

The short-term outlook for the European and commodity currencies is slightly bearish. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is long on all foreign currencies.

Good luck!


Overnight

  • Japan: The merchandise trade balance showed a trade deficit of 754.127 billion yen in August following the downwardly revised deficit of 518.9 billion yen in July.

  • Australia: Australia's industrial sector in undergoing a moderate recovery in the September quarter after a prolonged period of contraction, the latest Westpac-ACCI Survey of Industrial Trends showed.

  • China: The flash HSBC/Markit manufacturing PMI rose to 47.8 in September from 47.6 in August.

  • Japan: All industry activity fell 0.6% in July, reversing the 0.3% increase in June.

  • Japan: The Bank of Japan reiterated that the economy's recovery from last year's earthquake has come to a pause, while overseas economies have "moved deeper into a deceleration phase."

  • Japan: Machine tool orders for August

  • Eurozone: Producer Price Index for August

  • Eurozone: The PMI for the manufacturing sector rose to a six-month high of 46 in September from 45.1 in August.

  • Switzerland: The surplus fell to CHF 1.733 billion in August from CHF 2.88 billion in July.

  • Switzerland: Industrial Production for the second quarter

  • UK: Retail sales fell 0.2% month-on-month in August following a 0.3% rise in July.


Today's economic calendar

  • US: Initial jobless claims (Sep 15)
  • US: Markit Manufacturing PMI for September
  • US: Leading indicator for August
  • US: Philadelphia Fed manufacturing survey for September


EUR – December

Luca Model: Long since August 3

The overbought December euro opens at a one-week low after ending off a three-day low on Wednesday and peaking near a four-month high on Monday. It is overbought and trading above the 200-day exponential moving average. The euro had bottomed an over two-year low in late July and remains in a rising channel.

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

The 200-day exponentially smoothed moving average supports at 1.2894. The 21-day exponentially smoothed moving average support s at 1.2801.

Initial resistance is at 1.3020. The next cap is at 1.3095. A pivot high is at 1.3183.

INDICATORS

Fast stochastics: Bearish

MACD: Bullish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


JPY – December

Luca Model: Long since August 22

The December Japanese yen opens above the 21-day exponential moving average after reversing aggressively from a one-month low on Wednesday. The bottom of its channel rising since late June provided excellent support. It had peaked at a seven-month high on September 13.

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

Immediate resistance is at 1.2855. The next resistance level is 1.2880.

The 21-day exponentially smoothed moving average supports at 1.2766. Further support is at 1.2630.

INDICATORS

Fast stochastics: Bullish

MACD: Sideways

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Slightly bullish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


GBP – December

Luca Model: Long since July 19

The overbought December pound opens at a four-day low after climbing to a new high for the uptrend on Monday. The pound had bottomed at a 4 1/2-month low on June 1.

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

Immediate support is at 1.6140. The next floor is 1.6070. The 21-day exponential moving average supports at a distant 1.6016.

Initial resistance is at 1.6230. A pivot high is at 1.6268.

INDICATORS

Fast stochastics: Slightly bearish

MACD: Bullish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


CHF – December

Luca Model: Long since August 3

The overbought December Swiss franc opens at a four-day low after marking a new high for the uptrend on September 14. The franc is trading below its 200-day exponential moving average. It had bottomed at a 19-month low on July 24. The franc has been trading a rising channel since then.

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

Initial support is at 1.0645. The 21-day exponential moving average follows at 1.0607.

The 200-day exponentially smoothed moving average caps at 1.0756. A pivot high is at 1.0838.

INDICATORS

Fast stochastics: Slightly bearish

MACD: Bullish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


CAD – December

Luca Model: Long since June 29

The overbought December Canadian dollar opens at a near two-week low after spiking to a new high for the uptrend on September 14. The Canadian dollar has been trading in a channel rising since late July. It bottomed at a 5 1/2-month low on June 1.

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

The 21-day exponential moving average supports at 1.0168. Further support is at 1.0060.

Immediate resistance is at 1.0245. A pivot high is at 1.0359.

INDICATORS

Fast stochastics: Bearish

MACD: Bullish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


AUD – December

Luca Model: Long since September 7

The December Australian dollar opens at a nine-day low after recovering on Wednesday from two days of losses and marking a new high for the uptrend on September 14. It is trading below the 21-day exponential moving average. The Aussie, which has been advancing since June 4, peaked at a new high for the uptrend on August 9.

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

Immediate support is at 1.0250. Further support is at 1.0190.

Initial resistance is at 1.0360. Further resistance is at 1.0430. A pivot high is at 1.0537.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bullish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways