Most of the foreign currencies futures open unchanged in the US. Only the oversold pound rallied following the latest quarterly Inflation Attitudes Survey from Bank of England and GfK NOP, which showed that UK's inflation expectations rose. The US economic agenda features the trade balance and the weekly jobless claims report.
The European bourses are down across the board, while oil and gold are little changed. The US stock indexes are lower in pre-open market. If the selling pressure in stock continues, the short-term outlook will remain slightly bearish for most of the European and commodity currencies and marginally bullish for the yen. The medium-term outlook remains bearish for the European currencies, sideways for the yen and bullish for the commodity currencies. My model is long all of the foreign currencies futures except for the yen and the pound.
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Analysis based on:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004
Overnight:
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Australia: The unemployment rate in Australia increased to 5.3% in February from January’s downwardly revised rate of 5.2%.
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Japan: The GDP for the fourth quarter was revised down to +0.9% from +1.1% in the preliminary report.
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China: Consumer prices increased 2.7% year-on-year in February following the 1.5% growth in January.
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Germany: The labor cost per hour worked decreased 0.5% in the fourth quarter, compared to the 0.2% decline in the third quarter.
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France: Non-farm payrolls decreased 0.1% quarter-on-quarter in the final quarter of 2009.
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France: The budget balance showed a deficit of EUR 9.2 billion in January compared to a shortfall of EUR 8.1 billion seen in the same period of last year.
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Switzerland: SNB left its 3-Month Libor target rate at 0.25%
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UK: The annual rate of inflation for 2010 is expected to rise to 2.5% from 2.4% estimated in November, according to the latest quarterly Inflation Attitudes Survey from Bank of England and GfK NOP.
Today’s economic calendar:
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US: Trade balance for January
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US: Initial jobless claims
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Canada: Capacity utilization rate for the fourth quarter
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Canada: New housing price index for January
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Canada: International merchandise trade for January
EUR- March
Luca Model: Long since February 26
The March euro failed again to break the key resistance of the 21-day moving average and opens flat in the US. Only a close above this average would suggest the end of the triangle and an upgrade of the bearish medium-term outlook. My model is long. The short-term outlook is bearish.
Immediate support is at 1.3600. Below 1.3520, the low of the downtrend is 1.3433.
The 21-day moving average resists at 1.3672. The next caps are 1.3737 and 1.3800.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bullish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
JPY - March
Luca Model: Short since March 5
The March Japanese yen reversed Asian gains to challenge again the bottom of the Ichimoku cloud. This level should hold and the yen should attempt to recover. The short-term outlook is sideways to slightly bullish. The medium-term outlook remains sideways and my model is short.
Immediate resistance is at 110.50 from the 55-day moving average. The 21-day moving average follows at 111.13. Above 111.56, distant resistance is at 112.49.
Initial support is at 110.02 from the bottom of the Ichimoku cloud at 110.02. Distant support lies at 109.24.
INDICATORS
Fast stochastics: Bearish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
GBP - March
Luca Model: Short since March 9
The oversold March pound rallied unexpectedly in Europe following the report on increased expectations for inflation in the UK. This being said, cable remains prisoner to the range of March 1. The short-term outlook is sideways. The medium-term outlook is bearish and my model is short.
Initial resistance is at 1.5095. The next cap is 1.5174. The 21-day moving average resists at a very distant 1.5287.
Immediate support is at 1.4990. The next support is 1.4940. Wednesday’s low is 1.4872.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Sideways
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
CHF - March
Luca Model: Long since February 26
The March Swiss franc opens with nominal gains in the US and remains around the 21-day moving average. The Swissy is trading in a short-term triangle. The short-term outlook is sideways to slightly bearish. The medium-term outlook remains bearish, but my model is long.
Initial support is at .9336 from the 21-day moving average. Good support is at .9250. Further support is at .9208.
Immediate resistance is at .9366. This is followed by .9393. Above .9442, distant resistance is at .9525.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Sideways
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways to slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
CAD – March
Luca Model: Long since February 26
The March Canadian dollar edged lower overnight after marking a new high of the uptrend. The short-term outlook is slightly bearish. The medium-term outlook is bullish and my model is long.
Immediate support is at .9730. Further support is at .9697 and .9669. The 21-day moving average supports at .9620.
The high of the uptrend is .9788. Above .9827, distant resistance is seen at .9898.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bullish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
AUD – March
Luca Model: Long since February 26
The March Australian dollar recouped Asian losses to open flat in the US. The short-term outlook is sideways to slightly bearish. The medium-term outlook is bullish and my model is long.
Immediate support is at .9091. The next floor is at .9050. The 21-day moving average follows at .9008.
Thursday’s current high is at .9168. The next cap is .9218. The top of the uptrend is .9275.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
