The foreign currency futures consolidated in the Far East after all majors but the safety currencies closed down on Tuesday. Everyone lamented the quick-lived euphoria on Friday’s NFP report; well, that’s what happens when a long weekend allows traders to reconsider the reality of that report! The euro fell a little too hard on Tuesday on the resurrected fears of the Eurozone debt crisis; it’s really nothing new, though, there is no silver bullet to fix it, and the Eurozone won’t explode into pieces because of it. So, stick to the status quo in that matter. In fact, I wouldn’t be too surprised that the Eurozone banks are not in such dire straits as they were advertised to be.
The Asia/Pacific stock markets sank, of course, and the gold/oil spread climbed up. The aversion to risk should persist today.
The short-term outlook remains slightly bearish for the euro, pound and the commodity currencies and sideways to slightly bullish for the yen and Swiss franc. The loonie should get support later in Europe on expectations that the BoC will hike rates by 25% basis points (odds: 50-50). The medium-term outlook is sideways for most of the European and commodity currencies. My model is long on the Dow Jones CME FX$INDEX and all of the foreign currency futures except for the euro and pound.
This analysis is based on my books, as follows:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004
Overnight:
- Australia: Home loans for July
- Japan: Machine orders for July
- Japan: Current account for July
Today’s economic calendar:
- Germany: Trade balance for July
- France: Trade balance for July
- France: Bank of France business sentiment for August
- Germany: Industrial production for July
- UK: Industrial production for July
- UK: BRC shop price index for August
- UK: NIESR GDP estimate for August
EUR- September
Luca Model: Short since September 6 (reversing long since September 1)
The September euro barely moved in the Far East after closing sharply lower on Tuesday. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model went short. My model also went short euro/yen and euro/pound. The long-term outlook remains bearish.
Immediate support is at 1.2655. A pivot low is at 1.2587. The bottom of the Ichimoku cloud is 1.2540.
Initial resistance is at 1.2740. The 21-day moving average resists at 1.2784. Distant resistance is at 1.2876 and 1.2919.
INDICATORS
Fast stochastics: Bearish
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY - September
Luca Model: Long since August 31
The September Japanese yen remained firm in Asia after climbing to a new high for the uptrend on Tuesday. The short-term outlook is sideways to slightly bullish. The medium-term outlook is bullish and my model is long.
The new high of the uptrend is 119.76. Further resistance is at 120.14, 120.57 and 120.84.
Initial support is at 118.99. The next floors are 118.38 and 117.81 from the 21-day moving average.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
GBP - September
Luca Model: Short since August 10
The September pound edged up in the Far East after tumbling to as low as a 1 ½-month low on Tuesday. The pound has been alternating up and down days for five days. The short-term outlook is only slightly bearish. The medium-term outlook is sideways and my model is short.
Tuesday’s low is 1.5295. Further support is at 1.5225. Distant support is at 1.5160.
Immediate resistance is at 1.5393 from the 55-day moving average. The 21-day moving average resists at 1.5477.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CHF - September
Luca Model: Long since August 16
The September Swiss franc, the strongest the European and commodity currency, edged lower in Asia after challenging the top of the uptrend on Tuesday. The short-term outlook remains sideways to slightly bullish. The medium-term outlook is sideways and my model is long again.
The high of the uptrend is .9937. Further resistance is at 1.0028.
Initial support is at .9820. The next floor is .9779. The 21-day moving average supports at .9728.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – September
Luca Model: Long since September 1
The September Canadian dollar marked time in the Far East after falling on Tuesday and ahead of the possible rate hike later today. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Initial support is at .9514. Below .9473, there is additional support at .9425, .9385 and .9329.
The 55-day moving average resists at .9587. Tuesday ‘s high is .9670.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
AUD – September
Luca Model: Long since August 27
The overbought September Australian dollar consolidated in Asia after falling from the second high of the uptrend on Tuesday. It remains glued the median of the channel rising since June 8. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Immediate support is at .9073. Below .9010, the 21-day moving average supports at .8987.
Resistance comes from two pivot highs at .9183 and .9230.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways?
LONG-TERM: Sideways
