The financial markets open mixed in the US on Friday. Most of the foreign currencies futures open lower, as expected, even though the Asia/Pacific stock markets closed up and the European bourses are up. But oil and gold slipped. Meanwhile, the US stock indexes are mixed in pre-open market. The pound suffered the brunt of the losses after BoE policy maker Andrew Sentance said Britain may return to recession. The euro remains pressured by the Greek drama. Only the Swiss franc opens flat after SNB Governing Board member Jean-Pierre Danthine said yesterday policy makers can’t keep borrowing costs near zero for an extended period of time and maintain purchases of foreign currencies indefinitely.
The short-term outlook is bearish for the European and commodity currencies and sideways for the yen. The medium-term outlook is sideways for the European currencies and the yen and bullish for the commodity currencies. My model is long all of the foreign currencies futures except for the euro and the yen.
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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: No data
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Japan: The all industry activity climbed 3.8% in January after a revised monthly fall of 0.2% in December.
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Germany: Producer price index were flat in February after growing 0.8% in January, and fell 2.9% annually in February, slower than -3.4% in January.
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France: Monthly wage of all employees rose 0.2% sequentially in the fourth quarter, slower than the 0.5% increase in the third quarter.
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Italy: Industrial new orders fell 2.8% in January, following December's 4.7% growth.
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Eurozone: ECB President Jean-Claude Trichet said that strengthening longer-term confidence is crucial for the post-crisis economy and robust policy frameworks will be needed against future challenges.
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UK: No data
Today’s economic calendar:
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US: No data
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Canada: Consumer price index for February
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Canada: Retail sales for January
EUR- March
Luca Model: Short since March 18 (reversing long since February 26)
The June euro extended its losses since late Wednesday. The short-term outlook remains slightly bearish despite the oversold condition. The medium-term outlook is sideways and my model reversed its long position.
Initial support is at 1.3515. Distant support lies at 1.3433 from a pivot low.
Immediate resistance is at 1.3600. The 21-day moving average resists at 1.3675. Distant resistance is at 1.3740.
INDICATORS
Fast stochastics: Bearish (oversold)
MACD: Bullish (overbought)
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY - March
Luca Model: Short since March 5
The June Japanese yen opens marginally lower in an inside range after closing down on Thursday. It is still trading just below the 21-day moving average. The short-term outlook is sideways. The medium-term outlook remains sideways and my model is short.
Initial support is at 110.34. Below 109.84, distant support lies at 109.24.
The 21-day moving average caps at 110.99. Above 111.56, distant resistance is at 112.49.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
GBP - March
Luca Model: Long since March 11
The June pound sank the most overnight on expectations for sustained economic weakness. I broke below the 21-day moving average but found support from the Ichimoku signal line. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Immediate support is at 1.5120 from the Ichimoku signal line. The next support is 1.5074. Distant support is at 1.4966.
Initial resistance is 1.5172. The 21-day moving average lies at 1.5241. The next caps are 1.5286, 1.5323 and 1.5412.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CHF - March
Luca Model: Long since February 26
The June Swiss franc marked time around the 55-day moving average overnight after closing down on Thursday. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Initial support is at .9396 from the 21-day moving average. The next support follows at .9338 from the bottom of its rising channel.
The 100-day moving average resists at .9519. Further resistance is at .9557 and .9603.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bullish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CAD – March
Luca Model: Long since February 26
The overbought June Canadian dollar remains under pressure, but well off its overnight lows, after closing down on Thursday. It had reached a new high for the uptrend on Wednesday. The short-term outlook is slightly bearish for about half a day, as the loonie has not yet fallen for two consecutive days during its steep rally since February 26. The medium-term outlook is bullish and my model is long. Be careful, the loonie is in a steep rising wedge!
Below .9828, further support is at .9776 and .9727 from the 21-day moving average.
Above the high of the uptrend at .9930, further resistance is seen at .9970.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bullish (overbought)
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bearish for about half a day
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
AUD – March
Luca Model: Long since February 26
The June Australian dollar made no progress overnight after closing down on Thursday and remains at the top of a rising wedge. The short-term outlook is slightly bearish for about half a day. The medium-term outlook is bullish and my model is long.
Initial support is at .9104. Below .9030, the 21-day moving average follows at .8998. Distant support is at .8885.
The new high of the uptrend is .9164. Strong resistance follows at .9218. Distant resistance is stacked at .9275.
INDICATORS
Fast stochastics: Sideways (overbought)
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bearish for about half a day
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
