The appetite for risk was spotty on Wednesday. The market focused on the Fed’s minutes and the weakness of the economy should sanction another round of quantitative easing measures at their next meeting in September. Just in time for the elections!
All of the foreign currencies but the Canadian dollar surged on hopes that the Fed will ease (see above) and that the European Central Bank will act to curb surging peripheral Eurozone borrowing costs and find ways to keep Greece afloat. The US stock markets but were mixed, but gold, oil and silver advanced.
The short-term outlook for most foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long across the board.
Good luck!
Overnight
- US: Existing home sales rose 2.3% to an annual rate of 4.47 million in July from 4.37 million in June. The report median existing-home price edged down 0.8% to $187,300 in July from $188,800 in June.
- US: The FOMC minutes of the most recent policy meeting showed that many members of the Federal Reserve say additional monetary policy accommodation is likely warranted unless the economy improves substantial. This may signal another round of quantitative easing measures at their next meeting in September.
- Canada: Retail sales declined by 0.4% in June after expanding 0.2% gains in May.
Today's economic calendar
- China: Leading economic index
- China: HSBC manufacturing PMI for August
EUR – September
Luca Model: Long since August 3
The September euro soared again to a 1 ½-month high on Wednesday. The euro is trading above the 55-day exponential moving average. The euro had bottomed an over two-year low last week, but should remain under overall pressure.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Initial resistance is at 1.2600. Further resistance is at 1.2705.
The 55-day exponential moving average supports at 1.2433 and the 21-day exponential moving average at 1.2355.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY – September
Luca Model: Long since August 22
The September Japanese yen exploded to a nine-day high on ongoing short covering after bottoming at a five-week low on Monday. The yen closed above the 21-day exponentially smoothed moving average. It is trading in a symmetrical triangle.
The short-term outlook is sideways. The medium-term outlook is sideways and my model went long.
Immediate resistance is at 1.2780. The next resistance is 1.2854.
The 21-day exponential moving average supports at 1.2694. Monday’s low is 1.2556.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
GBP – September
Luca Model: Long since July 19
The September pound ended at a three-month high after closing above the 200-day exponential moving average on Tuesday. The pound broke the top of a symmetrical triangle. The pound had formed a medium-term peak at an eight-month high on April 30 and a bottom at a 4 1/2-month low on June 1.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Initial resistance is at 1.5895. Further resistance is at 1.6085.
Immediate support is at 1.5805. The 200-day exponential moving average supports at 1.5741 and the 21-day exponential moving average at 1.5683.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF – September
Luca Model: Long since August 3
The September Swiss franc remains firm after climbing up to a 1 ½-month high and ending above the 55-day exponential moving average for two days. It had marked a one-month high on August 6. The franc bottomed at a 19-month low on July 24.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Initial resistance is at 1.0490. Further resistance is at 1.0590.
The 550day exponential moving average supports at 1.0357 and the 21-day exponential moving average at 1.0290.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CAD – September
Luca Model: Long since June 29
The September Canadian dollar ended off a 17-day low after falling from a four-month high on Tuesday. It’s been trading in a channel rising since late July. The loonie had peaked on April 27 and bottomed at a 5 1/2-month low on June 1. It should make a mild correction through the end of the week before the next move higher.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Immediate resistance is at 1.0105. A pivot high is at 1.0168. Distant resistance is at 1.0275.
The 21-day exponential moving average supports at 1.0033. A pivot high is at 1.0155.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – September
Luca Model: Long since June 29
The September Australian dollar reversed early losses and ended up on Wednesday after advancing for two days. It is still holding in an inside range. It is trading around the 21-day exponential moving average. The Aussie, which has been advancing since June 4, peaked at a new high for the uptrend on Thursday.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Immediate resistance is at 1.0505. The top of the uptrend is 1.0578.
The 21-day exponential moving average supports at 1.0431. Further support is at 1.0350 and 1.0295.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
