The appetite for risk improved drastically ahead of the US open after the EU politicians unexpectedly tackled the regional debt crisis. While the crisis is very far from being alleviated, regional politicians succeeded in providing a Eurozone’s bailout scheme. The key elements of the announcement are the direct recapitalization of European banks via the euro zone's permanent rescue fund, the European Stability Mechanism, and bond support for Italy and Spain without extra austerity.
The European and commodity currencies open sharply higher in the US after the falling on Thursday, while the yen is flat. The Asia/Pacific stock indexes rose. The European bourses are up and the US stock markets are up in pre-open trading. Gold, oil and silver are also trading higher.
The short-term outlook for the European and commodity currencies is slightly bullish. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on all the foreign currencies.
Overnight
Australia: Private sector credit rose 0.5% in May from +0.4% in April.
Japan: The national CPI slowed to 0.2% in the year to May from +0.4% in April. The core CPI fell 0.6% after declining 0.3%.
Japan: Tokyo CPI fell 0.6% in June y-o-y after declining 0.5% in May. The core CPI fell 1.0%, less than -1.3% in May.
Japan: The unemployment rate declined to 4.4% in May from 4.6% in April.
Japan: Overall household spending rose 4.0% in May after expanding 2.6% in April.
Japan: Industrial production slumped 3.1% in May after easing 0.2% in April.
Japan: The PMI) for the manufacturing sector declined to 49.9 in June from 50.7 in May.
Eurozone: Consumer Price Index remained unchanged at 2.4% in June on annual basis.
Germany: Retail sales fell 0.3% in May following a 0.2% decline in April.
Switzerland: The KOF leading indicator increased to 1.16 in June from a revised 0.80 in May.
UK: The seasonally adjusted Index of Services increased 2% in April on a yearly basis.
Today's economic calendar
United States: Personal income for May
United States: Chicago Purchasing Managers' Index for June
United States: Reuters/Michigan consumer sentiment index for June
Canada: Gross Domestic Product for April
Canada: Industrial product price/raw material price index for May
EUR – September
Luca Model: Short since May 7
The September euro opens at an eight-day high in the US around the 21-day exponentially smoothed moving average after falling for four days and bottoming at a 3 ½-week low on Thursday. The euro had bottomed near a two-year low on June 1 after sliding nearly every day since peaking on May 1.
The short-term outlook is slightly bullish. The medium-term outlook is bearish and my model is short.
Initial resistance is at 1.2670. A pivot high is 1.2750.
Immediate support is at 1.2530. Further support is at 1.2475 and 1.2417.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
JPY – September
Luca Model: Short since June 21
The September Japanese yen fell from an eight-day high and opens flat in the US around the 21-day exponentially smoothed moving average. The short-term outlook is sideways. The medium-term outlook is slightly bullish but my model went short.
Initial resistance is at 1.2653. Further resistance is at 1.2700.
The 55-day exponentially smoothed moving average supports at 1.2556. A pivot low is at 1.2416.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
GBP – September
Luca Model: Short May 15
The September pound opens off an eight-day high in the US after falling for two days. The pound is trading around the 21-day exponentially smoothed moving average. It had put in a medium-term top at a one-month high on June 20. The pound had formed a medium-term peak at an eight-month high on April 30 and bottomed at a 4 1/2-month low on June 1.
The short-term outlook is slightly bullish. The medium-term outlook is slightly bearish and my model is short.
Friday’s high is 1.5676. A pivot high is at 1.5773.
Immediate support is at 1.5515. Further support is at 1.5455 and 1.5320.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
CHF – September
Luca Model: Short since May 2
The September Swiss franc opens off an eight-day high in the US after falling for four days and hitting a 3 ½-week low on Thursday. It is trading around the 21-day exponentially smoothed moving average. The franc, which has been falling since peaking on May 1, bottomed at a 15-month low on June 1.
The short-term outlook is slightly bullish. The medium-term outlook is bearish and my model is short.
Immediate resistance is at 1.0535. The 55-day exponentially smoothed moving average resists at 1.0616.
Immediate support is at 1.0363. A pivot low is at 1.0280.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
CAD – September
Luca Model: Short since May 7
The September Canadian opens at an eight-day high in the US after falling to a 3 ½-week low on Thursday. It moved above the 21-day moving. The loonie had peaked on April 27 and bottomed at a 5 1/2-month low on June 1.
The short-term outlook is slightly bullish. The medium-term outlook is slightly bearish and my model is short.
A medium-term pivot high resists at .9824.
Immediate support is at .9690. The next floor is .9620. A pivot low is at .9554.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Slightly bullish
AUD – September
Luca Model: Short since April 30
The overbought September Australian dollar opens at an eight-day high in the US and well above the 200-day exponentially smoothed moving average. It has been advancing since June 4 and marked a 1 ½-month high on June 20.
The short-term outlook is slightly bullish. The medium-term outlook is sideways and my model is short.
A pivot high is at 1.0142. Further resistance is at 1.0295.
Immediate support is at 1.0015. The 21-day supports at .9944.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
