The euro and franc extended gains

The appetite for risk is divergent ahead of the release of the NFP report; the market is pricing in an increase of 160,000. The euro and franc extended gains, but the pound fell and the commodity currencies slipped after the less than stellar PMI reports in China. The yen open at a fresh 2 ½-year low. Most Asian stock markets advanced. The European bourses are up and the US stock markets are higher in pre-open trading. The gold/oil ratio is up.

The short-term outlook for most of the foreign currencies is sideways with various biases into the NFP report. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on the European currencies and short yen and the commodity currencies.

Good luck!

Overnight

• China: The official PMI slipped to 50.4 in January from 50.6 in December.

• China: The HSBC/Markit PMI rose to 52.3 in January from 51.5 in December.

• Japan: The unemployment rate rose to 4.2% in December from 4.1% in November.

• Japan: Overall household spending fell 0.7% in December y-o-y following the 0.2% increase in November.

• Australia: The AIG Performance of Manufacturing Index fell to 40.2 in January from 44.3 in December.

• Australia: The final PPI rose 0.2% in the fourth quarter after adding 0.6% in the third quarter.

• Eurozone: The unemployment rate remained unchanged at 11.7% in December.

• Eurozone: The Final manufacturing Purchasing Managers Index came in at 47.9 in January, up from 46.1 in December and slightly above the flash estimate of 47.5.

• Italy: The unemployment rate remained stable at 11.2% in December.

• Switzerland: The Purchasing Mangers' Index rose to 52.5 in January from a revised 49.2 in December.

• UK: The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index slipped to 50.8 in January from a 15-month high of 51.2 in December.

Today's economic calendar

• US: Nonfarm payrolls and unemployment rate for January

• US: Manufacturing PMI for January

• US: Reuters/Michigan Consumer Sentiment Index for January

• US: Construction Spending for December

• US: ISM Manufacturing PMI for January

EUR – March

The LGR Model: Long since January 24

The March euro extended gains and opens at a new 14-month high in the US. The euro is trading in a short-term bullish flag targeting the 1.3750 area and in a medium-term bullish flag targeting the 1.4200 area. It is trading above the 21-day exponential moving. The euro bottomed at an over two-year low in July.

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

Immediate resistance is at 1.3705. Further resistance is at 1.3830.

Initial support is at 1.3595. Further support is at 1.3505 and 1.3415.

INDICATORS

Fast stochastics: Bullish

MACD: Bullish

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Slightly bullish

MEDIUM-TERM: Bullish

LONG-TERM: Slightly bullish

JPY – March

The LGR Model: Short since January 24

The oversold March Japanese yen is falling for a fifth day and opens at a new 2 1/2-year low. The yen is trading below the neckline of a long-term head–and-shoulders pattern and the target is the 1.0580 area. It is trading well below the 21-day exponential moving average. The yen had peaked on September 13.

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

Initial support is at 1.0795. Further support is at 1.0695.

Immediate resistance is at 1.0895. Further resistance is at 1.1025, 1.1075 and 1.1160.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Bearish

LONG-TERM: Bearish

GBP – March

The LGR Model: Long since January 30

The March pound opens slightly lower in the US. The pound had marked a new five-month low on Monday. The pound is moving away from the bottom of a long-term (four-year) triangle in the 1.56 area. It is trading below the 21-day exponential moving average but is not oversold any more. The pound had marked a 17-month high on January 2 and bottomed on June 1.

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

Immediate support is at 1.5805. Further support is at 1.5740.

Initial resistance is at 1.5890. Further resistance is at 1.5985.

INDICATORS

Fast stochastics: Bullish

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

CHF – March

The LGR Model: Long since January 15

The March Swiss franc opens off a 10-month high. The franc is trading in a medium-term symmetrical triangle. It had marked a seven-month high on December 20 and a 19-month low on July 24.

The short-term outlook is sideways to slightly bullish. The medium-term outlook is slightly bullish and the LGR model is long.

The top of the uptrend is at 1.1095. Further resistance is at 1.1200.

Initial support is at 1.0985. Further support is at 1.0885.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bullish

Ichimoku: Slightly bullish

OUTLOOK

NEAR-TERM: Sideways to slightly bullish

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways

CAD – March

The LGR Model: Short since January 18

The March Canadian dollar opens just below the 200-day exponential moving average after closing at an eight-day high on Thursday and reaching a six-month low last Friday and Monday. It is trading below the 50% mark of the June-September uptrend. The loonie had peaked at a 2 ½-month high on January 11. 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 the LGR model is short.

Initial support is at .9955. Further support is at .9825.

Immediate resistance is at 1.0035. Further resistance is at 1.0065.

INDICATORS

Fast stochastics: Sideways

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

AUD – March

The LGR Model: Long since January 2

The March Australian dollar has been alternating up and down days this week and today opens under pressure at a one-month low from the relatively low Chinese PMI reports. The Aussie marked a new high for the uptrend on January 10.

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

The 100-day exponential moving average supports at 1.0329. Further support follows at 1.0280 and 1.0215.

Immediate resistance is at 1.0415. Further resistance is at 1.0510 and 1.0547.

INDICATORS

Fast stochastics: Slightly bearish

MACD: Slightly bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways