All of the foreign currency futures but the safety currencies rallied on Wednesday. The yen, Swiss franc and the Australian dollar reached out new highs for their uptrend or upmove. The yen, however, fell from a new 15-year high as demand for European bonds eased fears the Eurozone’s debt crisis is worsening. Told you so! The loonie received support after the BoC hiked its rate of 25% basis points strengthened after the central bank raised benchmark interest rates and signaled further increases this year. The US stock markets recovered about half of Tuesday’s losses, while the gold/oil spread is down. The Beige Book was as bas as expected, so the FX market took it in stride.
The short-term outlook is now sideways for all of the foreign currency futures. 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:
- US: Fed's Beige Book acknowledged that the twelve Fed districts have seen widespread signs of a deceleration in the pace of economic growth in recent weeks, but noted that national economic activity has continued to expand.
- Canada: Building permits fell 3.3% in July
- Canada: Bank of Canada hiked rates to 1.00% from 0.75%
- Canada: Ivey Purchasing Managers Index for August
Today’s economic calendar:
- Australia: Unemployment rate for August
- Japan: BSI large manufacturing for the third quarter
- Japan: Consumer confidence for August
EUR- September
Luca Model: Short since September 6
The September euro closed slightly higher after hitting a one-week low early Wednesday. The short-term outlook is sideways. The medium-term outlook is sideways and my model is short. My model is also short euro/yen and euro/pound. The long-term outlook remains bearish.
Initial resistance is at 1.2740. The 21-day moving average resists at 1.2788. Distant resistance is at 1.2876 and 1.2919.
Immediate support is at 1.2655. A pivot low is at 1.2587. The bottom of the Ichimoku cloud is 1.2540.
INDICATORS
Fast stochastics: Bearish
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY - September
Luca Model: Long since August 31
The September Japanese yen fell from a new high for the uptrend early Wednesday. The short-term outlook is sideways to slightly bearish. The medium-term outlook is bullish and my model is long.
Below 118.99, the next floors are 118.38 and 117.73 from the 21-day moving average.
Initial resistance is at 120.01 from the new high of the uptrend. Further resistance is at 120.57 and 120.84.
INDICATORS
Fast stochastics: Sideways
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bearish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
GBP - September
Luca Model: Short since August 10
The September pound closed up on Wednesday. The pound has been alternating up and down days for six days, but failed to close above the 21-day moving average; only a close above it would signal a break of this yoyo mold. The short-term outlook is sideways. The medium-term outlook is sideways and my model is short.
Immediate resistance is at 1.5487 from the key 21-day moving average. Above 1.5550 there is additional resistance at a distant 1,5598.
Initial support is at 1.5397 from the 55-day moving average. Tuesday’s low is 1.5295. Distant support is at 1.5225.
INDICATORS
Fast stochastics: Bullish
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
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, closed flat after marking another high for the uptrend early Wednesday. The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
The newest high of the uptrend is .9941. 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
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – September
Luca Model: Long since September 1
The September Canadian dollar surged after the BoC hiked rates. The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Immediate resistance is at .9670. Further resistance is at .9754.
Initial support is at .9584. The next floor is .9514. Below .9473, there is additional support at .9425.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
AUD – September
Luca Model: Long since August 27
The overbought September Australian dollar closed up after marking a new high for the upmove. It still trades around the median of the channel rising since June 8. The street expects a strong employment report today will pressure the RBA into resuming tightening interest rates. The short-term outlook is now sideways to slightly bullish. The medium-term outlook is sideways and my model is long.
Resistance comes from a pivot high at .9230. Further resistance is at .9300.
Immediate support is at .9093. The 21-day moving average supports at a distant .9009.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways?
LONG-TERM: Sideways
