The European and commodity currencies open little changed the Far East on the first day of the fourth quarter after the gains they made on Thursday on-over optimism that Spain is alleviating its crashing debt crisis were aggressively reversed on Friday. The faster than expected resumption of the decline, while augmented by end-of –quarter sales, shows that markets couldn’t be fooled by the attempted patch job on the Spanish debt crisis, which might spillover even more into the social strata.
The short-term outlook for the European and commodity currencies is sideways with downside risk into Wednesday. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is short on all foreign currencies.
Good luck!
Overnight
- US: The Thomson Reuters and the University of Michigan consumer sentiment index for September was downwardly revised to 78.3 from the mid-month reading of 79.2.
- US: The ISM Chicago’s business barometer fell to 49.7 in September from 53.0 in August.
- US: The personal income inched up by 0.1% in August, matching the downwardly revised increase reported for July. Disposable personal income also edged up by 0.1%, in August following a matching increase in the previous month and personal spending increased by 0.5% in August compared to a 0.4% increase in July.
- Canada: The Gross Domestic Product slowed to 1.9% in July y-o-y from 2.5% in June.
Today's economic calendar
- Japan: Tankan Large All Industry Capex for the third quarter
- UK: Halifax house prices for September
EUR – December
Luca Model: Short since September 20
The December euro opens just above the 21-day exponential moving average in the Far East after reversing from a three-day on Friday. The euro had peaked near a four-month high on September 17. It is trading back above the 21-day exponential moving average. The euro had bottomed an over two-year low in late July and remains in a rising channel.
The short-term outlook is sideways with downside risk into Wednesday. The medium-term outlook is bullish but my model is short.
Immediate support is at 1.2839. Further support is at 1.2775 and 1.2700.
The 200-day exponentially smoothed moving average resists at 1.2895. The next caps are 1.2970, 1.3025 and 1.3085.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways with downside risk into Wednesday
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – December
Luca Model: Short since September 28
The December Japanese yen opens just above the 21-day exponential moving average in Asia after collapsing from a two-week high to a four-day low on Friday. It is no longer overbought. The yen had peaked at a seven-month high on September 13.
The short-term outlook is sideways. The medium-term outlook is bullish but my model went short.
The 21-day exponential moving average supports at 1.2807. Further support is at 1.2725.
Friday’s high is 1.2922. A pivot high is at 1.2977.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
GBP – December
Luca Model: Short since September 26
The December pound opens just above the 21-day exponentially smoothed moving average in the Far East after diving to a 2 ½-week low from a one-week high on Friday. It marked a new high for the uptrend on September and bottomed at a 4 1/2-month low on June 1. The pound is not overbought any longer.
The short-term outlook is sideways with downside risk into Wednesday. The medium-term outlook is bullish but my model went short.
The 21-day exponential moving average supports at 1.6101. Further support is at 1.6025.
Friday’s high is 1.6269. The top of the uptrend is 1.6304.
INDICATORS
Fast stochastics: Bearish (oversold)
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways with downside risk into Wednesday
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CHF – December
Luca Model: Short since September 20
The overbought December Swiss franc opens around the 21-day exponential moving average after sliding from a three-day high on Friday. The franc is trading below its 200-day exponential moving average. It peaked at a new high for the uptrend on September 14 and bottomed at a 19-month low on July 24. The franc has been trading a rising channel since late July.
The short-term outlook is sideways with downside risk into Wednesday. The medium-term outlook is bullish but my model is short.
Initial support is at 1.0590. Further support us at 1.0565.
Immediate resistance is at 1.0675. The 200-day exponential moving average caps at 1.0751. A pivot high is at 1.0838.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways with downside risk into Wednesday
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – December
Luca Model: Short since September 17
The overbought December Canadian dollar opens below the 21-day exponentially smoothed moving average after alternating direction for three days. It had reached a new high for the uptrend on September 14. The Canadian dollar has been trading in a channel rising since late July. It bottomed at a 5 1/2-month low on June 1.
The short-term outlook is sideways with downside risk into Wednesday. The medium-term outlook is bullish but my model is short.
Initial support is at 1.0123. Further support is at 1.0075 and .9990.
Immediate resistance is at 1.0205. A pivot high is at 1.0359.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways with downside risk into Wednesday
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Short since September 28
The December Australian dollar opens under pressure after dropping from a one-week high on Friday. It marked a new high for the uptrend on September 14. The Aussie, which has been advancing since June 4, peaked at a new high for the uptrend on August 9.
The short-term outlook is sideways with downside risk into Wednesday. The medium-term outlook is bullish but my model went short.
Immediate support is at 1.0255. Further support is at 1.0195.
The 21-day exponentially smoothed moving average caps at 1.0331. Further resistance is at 1.0430. A pivot high is at 1.0537.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways with downside risk into Wednesday
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
