Most of the foreign currency futures traded as expected in the Far East, with all the European and commodity currencies but the pound marginally up, and the yen down. The short-term outlook is slightly bullish for the European and commodity currencies for about half a day and then bearish, and the opposite for the yen.
The European bourses are mixed, while gold and oil are marginally higher. All eyes remain on the US stocks, which had tumbled hard recently. The US indexes are up in pre-open trading. As I have warned you in clear terms since late January, the US stock indexes have a lot more room to go down. Only a strong rally in the stocks will maintain the current FX pattern for the balance of the global day.
My model is short all of the majors foreign currencies but yen.
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Overnight:
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Australia: No data
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Japan: Machine tool orders surged 192% year-on-year in January after an increase of 63.4% in December.
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Germany: The CPI declined 0.6% in January versus 0.8% rise in the previous month, but rose 0.8% year-on-year after an increase of 0.9% in December.
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Germany: The trade surplus in December fell to EUR 13.5 billion from EUR 17.2 billion in November. The trade balance showed a surplus of EUR 136.1 billion in 2009, smaller than the EUR 178.3 billion in 2008.
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UK: Thirty-two percent of surveyors expect house prices to rise rather than fall in January following the 30% total in December, according to the Royal Institution for Chartered Surveyors' survey.
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UK: The trade deficit widened to GBP 7.3 billion in December from GBP 6.8 billion in November.
Today’s economic calendar:
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US: No data
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Canada: No data
FX FUTURES
Euro FX Futures
Luca Model: Short position since January 20
The oversold March euro opens higher in the US but remains in an inside range. Of course, it had collapsed to a nine-month low on Friday. The medium-term outlook remains bearish and my model is short. The short-term outlook is slightly bullish for about half a day and then bearish.
Above 1.3783, the next resistance levels follow at 1.3855 and 1.3906. The 21-day moving average resists at a very distant 1.4009.
Initial support is at 1.3692. Monday’s low is 1.3621. The low of the downtrend is 1.3584. Distant support is at 1.3483.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bullish for half a day, then bearish.
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Japanese Yen
Luca Model: Long since February 4 (reversing short since February 1)
The March Japanese yen edged further down overnight after closing a little lower on Monday. The short-term outlook is slightly bearish for half a day and then marginally bullish. The medium-term outlook remains sideways and my model is long.
Below 111.05, the 21-day moving average supports at 110.82. Distant support is at 109.57.
Immediate resistance is at 111.92. Good resistance is at 112.50. The top of the upmove is 112.95.
INDICATORS
Fast stochastics: Sideways
MACD: Bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
British Pound
Luca Model: Short since January 21
The March pound struggled higher in the Far East after marking a near nine-month low on Monday, but slipped in Europe. The short-term outlook is slightly bearish. The medium-term outlook is bearish and my model remains short.
The low of the downtrend is 1.5531. Further support is at 1.5469. Distant support is at 1.5388.
Initial resistance is at 1.5612. Good resistance is at 1.5675. Above 1.5769, the 21-day moving average follows at a very distant 1.5952.
INDICATORS
Fast stochastics: Sideways
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Slightly bullish?
Swiss Franc
Luca Model: Long since February 3 (reversing short since January 20)
The oversold March Swiss franc edged further up overnight in an inside range. The short-term outlook is slightly bullish for half a day and then bearish. The medium-term outlook is bearish and my model is short.
Immediate resistance is at .9369. The next cap is .9479. The 21-day moving average resists at a distant .9514.
Good support is at .9297. The low of the downtrend is .9264. Distant support is at .9187.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bullish for half a day, then bearish
MEDIUM-TERM: Bearish
LONG-TERM: Slightly bullish
Canadian Dollar
Luca Model: Long since February 2 (Reversing short since January 20)
The oversold March Canadian dollar advanced in an inside range overnight after making little progress on Monday. The short-term outlook is slightly bullish for half a day and then bearish. The medium-term outlook is sideways (barely) and my model is short.
Immediate resistance is at .9406 from the 100-day moving average. The 21-day moving average resists at .9441.
Initial support is at .9326. The low for the downtrend is .9274. The next support is at .9217 from a pivot low. Distant support is at .9175.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bullish for half a day, then bearish.
MEDIUM-TERM: Sideways?
LONG-TERM: Bullish
Australian Dollar
Luca Model: Short since January 20
The March Australian dollar rallied overnight after closing little changed on Monday. The short-term outlook is slightly bullish for about half a day and then sideways. The medium-term outlook is still sideways. My model is short.
Initial resistance is at .8718. The next level is .8744. The 100-day moving average follows at .8808 and the 21-say moving average resists at a very distant .8858.
Immediate support is at .8653. The neckline supports at .8587. The low of the downtrend is at .8547. A further support follows at .8448.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish for half a day, then sideways
MEDIUM-TERM: Sideways?
LONG-TERM: Bullish
