The appetite for risk is fairly limited ahead of the US open despite news that global banking regulators have watered down a key element of their plan to create a safer global financial system by relaxing rules on banking liquidity. The "fiscal cliff" crisis persists, but it will accelerate in February. The European and commodity currencies open little changed after making little progress on Friday. The Japanese yen opens slightly higher but remains very weak overall; it is only a matter of time before China will voice displeasure; a weak yen favors Japanese exports over Chinese exports.

The Asia/Pacific stock indexes closed mostly lower. The European bourses are down and the US stock markets are lower in pre-open trading. The gold/oil spread is up.

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

Good luck!


Overnight

  • Eurozone: The Sentix Index rose to -7 in January from -16.8 in December.

  • Eurozone: The producer price index fell 0.2% in November compared to 0.1% rise in the previous month.

  • Germany: The construction PMI fell to a ten-month low of 43.3 in December from 48.4 in November.

  • UK: The Halifax house prices rose 1.3% in December, lower than 1.6% in November.


Today's economic calendar

  • Canada: Ivey Purchasing Managers Index for December


EUR – March

The LGR Model: Short since January 3

The March euro opens slightly lower in the US after recovering from a 3 ½-week low on Friday. It is trading below the 21-day exponential moving average. The euro marked an eight-month high on December 19 and bottomed at an over two-year low in July.

The short-term outlook is sideways. The medium-term outlook is slightly bullish but the LGR model is short again.

The 55-day exponential moving average supports at 1.3025 and the 100-day exponential moving average at 1.2947. Further support is at 1.2890.

The 21-day exponential moving average resists at 1.3122. Further resistance is at 1.3160 and 1.3245.

INDICATORS

Fast stochastics: Sideways

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


JPY – March

The LGR Model: Short since September 28

The oversold March Japanese yen opens slightly higher, but remains perilously close to a 28-month low. It is testing the bottom of a long-term channel declining since November 2011. The yen is trading below the neckline of a long-term head–and-shoulders pattern. It also trades well below the 21-day exponential moving average. The yen had peaked at a seven-month high on September 13.

The short-term outlook is slightly bearish. The medium-term outlook is bearish and the model is short.

Immediate resistance is at 1.1450. Further resistance is at 1.1530 and 1.1615.

Initial support is at 1.1317. Further support is at 1.1240.

INDICATORS

Fast stochastics: Sideways

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bearish

LONG-TERM: Bearish


GBP – March

The LGR Model: Short since January 3

The March pound opens little changed in the US after spiking to a 1 ½-month low on Friday. It is trading below the 21-day exponential moving average. The pound had marked a 17-month high on January 2 and bottomed at a 4 1/2-month low on June 1.

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

The 100-day exponential moving average supports at 1.6011. Further support is at 1.5945.

The 21-day exponential moving average resists at 1.6126. Further resistance is at 1.6220.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


CHF – March

The LGR Model: Short since January 3

The March Swiss franc opens a little lower in the US after recovering from a three-week low on Friday. It is trading back below the 21-day exponential moving average. The franc had marked a seven-month high on December 20 and a 19-month low on July 24.

The short-term outlook is sideways. The medium-term outlook is slightly bullish but the LGR model is short.

Initial support is at 1.0740. Further support is at 1.0678.

The 21-day exponential moving average resists at 1.0867. The next cap is 1.0895.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


CAD – March

The LGR Model: Long since January 2

The March Canadian dollar opens little changed in the US after closing the down gap on Friday. It had marked a near two-month high on December 13. The Canadian dollar had marked a high for the uptrend on September 14 and a significant bottom on June 1.

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

Good resistance is 1.0160. Further resistance is at 1.0200.

The 21-day exponential moving average supports at 1.0082. Further support is at 1.0010. A pivot low is at .9919.

INDICATORS

Fast stochastics: Sideways

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


AUD – March

The LGR Model: Long since January 2

The March Australian dollar opens little changed in the US after recovering losses on Friday. It trades back above the 21-day exponential moving average. The Aussie reached a new high for this leg of the uptrend on December 17.

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

Immediate resistance is at 1.0472. Good resistance is at 1.0520. Further resistance is at 1.0605.

The 21-day exponential moving average supports at 1.0384 and the 55-day exponential moving average at 1.0337. Further support is at 1.0270.

INDICATORS

Fast stochastics: Sideways

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways