The appetite for risk remains arrested after imploding on Friday because of the weak nonfarm payrolls report. While disappointing, this report is unlikely to tip the Fed’s hand to further help the deteriorating US economy. After all, the Fed is running out of ammunition. The official Chinese inflation data eased in June.
The foreign currencies consolidated quietly in the Far East after the European and commodity currencies plunged on Friday. The Asia/Pacific stock indexes declined in line with the US markets on Friday.
The short-term outlook for most of the European and commodity currencies is sideways with additional downside risk. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen.
Overnight
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China: Consumer Price Index fell 0.6% in June after declining 0.3% in May.
China: Producer Price Index fell -2.1% y-o-y in June after falling 1.4% in May.
Japan: Machinery orders plunged 14.8% in May after rising 5.7% in April.
Japan: The current account surplus narrowed to yen 215.1 billion in May from the yen 333.8 billion in April.
Japan: Eco watchers survey
Today's economic calendar
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Switzerland: Unemployment Rate in June
Germany: Trade balance in May
EMU: Sentix investor confidence In July
EUR – September
Luca Model: Short since May 7
The oversold September euro marked time in the Far East after dropping to a two-year low on Friday. The euro should remain under overall pressure.
The short-term outlook is sideways. The medium-term outlook is bearish and my model is short.
Immediate support is at 1.2220. The next floor is 1.2137.
Initial resistance is at 1.2375. The next cap is 1.2476. The 21-day exponentially smoothed moving average resists at a distant 1.2522.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
JPY – September
Luca Model: Short since June 21
The September Japanese yen was firm in Asia after advancing on Friday. It is trading around the 55-day exponentially smoothed moving average.
The short-term outlook is sideways. The medium-term outlook is slightly bullish but my model is short.
Initial resistance is at 1.2625. Further resistance is at 1.2715.
Immediate support is at 1.2490. A pivot low is at 1.2416.
INDICATORS
Fast stochastics: Slightly 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 consolidated in the Far East after sinking to a four-week low on Friday. 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 sideways. The medium-term outlook is slightly bearish and my model is short.
Immediate support is at 1.5440. Further support is at 1 1.5415 and 1.5266.
Initial resistance is at 1.5515. The 21-day exponentially smoothed moving average resists at 1.5591. Distant resistance is at 1.5720.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
CHF – September
Luca Model: Short since May 2
The oversold September Swiss franc remains under pressure after sliding to a 1 1/2-year low on Friday. It is trading well below the 21-day exponentially smoothed moving average. The franc bottomed at a 15-month low on June 1.
The short-term outlook is sideways. The medium-term outlook is bearish and my model is short.
Initial support is at 1.0185. Further support is at 1.0140 and 1.0090.
Immediate resistance is at 1.0280. The next cap is at 1.0395. The 21-day exponentially smoothed moving average resists at 1.0438.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
CAD – September
Luca Model: Long since June 29
The September Canadian marked time in the Far East after peaking at a 1 ½-month high on Thursday and falling on Friday. It is trading just above the 21-day exponentially smoothed moving average and below the 55-day exponentially smoothed moving average. The loonie had peaked on April 27 and bottomed at a 5 1/2-month low on June 1.
The short-term outlook is sideways. The medium-term outlook is slightly bearish and my model is long.
The 21-day exponentially smoothed moving average supports at .9771. The next floor is .9700.
Immediate resistance is at .9845. A pivot high is at .9885.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
AUD – September
Luca Model: Long since June 29
The September Australian dollar was little changed in Asia after peaking at a two-month high on Thursday and sliding on Friday. It’s overbought, so the risk remains on the downside. It has been advancing since June 4.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is barely long.
Initial support is at 1.0070. The 21-day exponentially smoothed moving average supports at 1.0035. The next floor is .9910.
Immediate resistance is 1.0200. The next cap is 1.0260. A pivot high is at 1.0325.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
