The appetite for risk is mixed in the short run ahead of the US open and low in the medium term. The foreign currencies continue to trade divergently; the pound was vaulted by good UK data and some profit taking in EUR/GBP, while the Aussie was hurt by news that the RBA, which left rates unchanged at 3%, but made a statement which was more dovish-than-expected. The yen resumed losses toward a new 2 ½-year low. The euro and franc lower are drifting. The Asian stock indexes slumped. The European bourses are mixed, while the US stock markets are slightly higher in pre-open trading after melting on Monday. Gold, oil and silver are up.

The short-term outlook for most of the foreign currencies is sideways with various biases. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on the euro, franc and Canadian dollar, and short yen, pound and Australian dollar.

Good luck!


Overnight

  • China: The HSBC/Markit business activity index rose to 54 in January from 51.7 in December.

  • China: The People's Bank of China injected CNY 450 billion into the money markets through open market operations. This was the largest ever single-day injection.

  • Australia: The AiG Performance of Services Index rose to in 45.3 in January from 43.2 in December.

  • UK: The British Retail Consortium sales were up 1.9% in January y-o-y.

  • Australia: The House Price Index rose 1.6% in the fourth quarter following a 0.3% increase in the third quarter.

  • Australia: The trade balance merchandise showed a deficit of A$427 million in December following the upwardly revised A$2.788 billion deficit in November.

  • Australia: The RBA left its interest rate at 3%.

  • Eurozone: Retail sales fell more than expected by 0.8% in December after contracting 0.1% in November.

  • Eurozone: The final PMI composite for January rose to a ten-month high of 48.6 in January from its earlier flash estimate of 48.2 and from 47.2 in December.

  • Italy: The Consumer Price Index rose 0.2% in January, the same as in December.

  • Switzerland: The trade balance showed a surplus of CHF 24.4 billion in 2012, higher than CHF 23.5 billion in 2011.

  • UK: The PMI for the service sector surged to 51.5 in January from 48.9 in December.


Today's economic calendar

  • US: ISM non-manufacturing for January


EUR – March

The LGR Model: Long since January 24

The March euro opens off a one-week low in the US after falling on Monday and reversing recent gains. It marked a new 14-month high on Friday. 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 sideways. The medium-term outlook is slightly bullish and the LGR model is long.

Immediate resistance is at 1.3585. Further resistance is at 1.3660. A pivot high is at 1.3715.

Initial support is at 1.3460. The 21-day exponential moving average follows at 1.3408.

INDICATORS

Fast stochastics: Bearish

MACD: Sideways

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Slightly bullish


JPY – March

The LGR Model: Short since January 24

The oversold March Japanese yen resumed losses and opens near a new 2 1/2-year low in the US after recovering meekly from on Monday. 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 slightly bearish. The medium-term outlook is bearish and the LGR model is short.

A pivot low is at 1.0734. Further support is at 1.0695 and 1.0630.

Immediate resistance is at 1.0850. Further resistance is at 1.0920.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bearish

LONG-TERM: Bearish


GBP – March

The LGR Model: Short since February 1

The March pound opens further up in the US with help from the UK data after recovering on profit taking on Monday. The pound had marked a new five-month low on January 28. The pound is approaching the bottom of a long-term (four-year) triangle in the 1.56 area. There is also a double top formation targeting the 1.54 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 to slightly bullish. The medium-term outlook is sideways and the LGR model is short.

Initial resistance is at 1.5805. Further resistance is at 1.5875 and 1.5985.

Immediate support is at 1.5725. A pivot low is at 1.5670. Further support is at 1.5505.

INDICATORS

Fast stochastics: Sideways

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


CHF – March

The LGR Model: Long since January 15

The March Swiss franc opens little changed in the US after spiking to a 10-month high on Friday. 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. The medium-term outlook is slightly bullish and the LGR model is long.

Initial support is at 1.0925. Further support is at 1.0875 and 1.0820.

The top of the uptrend is at 1.1090. Further resistance is at 1.1200.

INDICATORS

Fast stochastics: Sideways

MACD: Slightly bullish

Ichimoku: Slightly bullish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


CAD – March

The LGR Model: Long since January 31

The March Canadian dollar opens below the 21-day exponential moving average after slipping off a 1 1/2- week high on Monday. The loonie had reached a six-month low on January 25. 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 long.

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

Immediate resistance is at 1.0055. Significant resistance is at 1.0175.

INDICATORS

Fast stochastics: Bullish

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


AUD – March

The LGR Model: Short since February 4

The March Australian dollar fell from a one-week high following the dovish RBA report and opens lower in the US. The Aussie marked a new high for the uptrend on January 10.

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

Initial support is at 1.0327. Further support follows at 1.0280 and 1.0215.

The 21-day exponential moving average resists at 1.0420. Further resistance is at 1.0510 and 1.0547.

INDICATORS

Fast stochastics: Slightly bearish

MACD: Bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways