The appetite for risk is very limited ahead of the US open on expectations for weak US third quarter earnings and after the IMF cut the global outlook. The foreign currencies open divergently again, with the European currencies and yen down and the commodity currencies mixed. The Asia/Pacific stock indexes ended mixed. The European bourses are down and the US stock markets are lower in pre-open trading. Gold is flat and oil is up.

The short-term outlook for the European currencies and yen is sideways to slightly bearish. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is short on all foreign currencies.


Overnight

  • UK: The BRC retail sales monitor improved to 1.50% in September from -0.40% in August.

  • UK: The RICS housing price balance improved to -15 in September from -18 in August.

  • Japan: The current account showed a surplus of ¥454.7 billion in August, down from ¥625.4 billion in July.

  • Japan: The Eco watchers survey showed that the assessment of current conditions fell by 2.4 points to 41.2 in September.

  • Australia: The National Australia Bank's business confidence was flat in September, up from -2 in August.

  • Global: The International Monetary Fund downgraded global growth estimate for 2012 to 3.3% from 3.5% estimated earlier in July. For next year, the IMF sees a sluggish 3.6% growth, down from the prior projection of 3.9%.

  • Germany: The manufacturing turnover remained unchanged in August after advancing 1.7% in July.

  • France: The trade gap widened to EUR 5.3 billion in August from July's deficit of EUR 4.1 billion.

  • Italy: The final Gross Domestic Product for the second quarter was confirmed at -0.8%.

  • UK: Industrial production fell 0.5% in August after expanding 2.8% in July.

  • UK: The trade balance showed a deficit of £-9.8 billion in August, wider than £-7.3 billion in July.


Today's economic calendar

  • Canada: Housing starts for September


EUR – December

Luca Model: Short since September 20

The December euro opens at a three-day low in the US, extending Monday’s losses. It is trading just above the 21-day exponential moving average. The euro had peaked near a four-month high on September 17. The euro had bottomed an over two-year low in late July and remains in a rising channel.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is bullish but my model is short.

The 21-day exponential moving average supports at 1.2908. Further support is at 1.2813. Distant support is at 1.2775.

Immediate resistance is at 1.3005. The next cap is 1.3080. The top of the uptrend is 1.3183.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


JPY – December

Luca Model: Short since September 28

The December Japanese yen opens lower and below the 21-day exponential moving average in the US after advancing to at a three-day high on Monday. 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.

Immediate support is at 1.2685. Further support is at 1.2625. A pivot low is at 1.2565.

Initial resistance is at 1.2845. An intermediate top is at 1.2922.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


GBP – December

Luca Model: Short since September 26

The December pound is falling for a third day and opens at four-week low. It marked a new high for the uptrend on September and bottomed at a 4 1/2-month low on June 1.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is sideways and my model is short.

The 55-day exponential moving average supports at 1.5958. Further support is at 1.5865.

The 21-day exponential moving average caps at 1.6093. An intermediate peak is at 1.6269.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


CHF – December

Luca Model: Short since September 20

The December Swiss franc opens at a three-day low in the US after slipping on Monday and reaching a two-week high on Friday. The franc is trading around its 21-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 to slightly bearish. The medium-term outlook is bullish but my model is short.

Initial support is at 1.0625. Further support is at 1.0565.

The 200-day exponential moving average resists at 1.0749. A pivot high is at 1.0838.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


CAD – December

Luca Model: Short since September 17

The December Canadian dollar opens marginally lower but still above the 21-day exponential moving average after spiking to a near two-week high on Friday. It had marked a 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. The medium-term outlook is bullish but my model is short.

The 21-day exponential moving average supports at 1.0177. Further support is at 1.0100 and .9990.

Initial resistance is at 1.0256. A pivot high is at 1.0359.

INDICATORS

Fast stochastics: Bullish

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Sideways


AUD – December

Luca Model: Short since September 28

The oversold December Australian dollar opens off its best levels after bouncing off a one-month low on Monday. It has been sliding for most of last week. The Aussie is trading below the trend line rising since July 12 and the 200-day exponential moving average. It had peaked at a new high for the uptrend on September 14. The Aussie has been advancing since June 4.

The short-term outlook is sideways. The medium-term outlook is bullish but my model went short.

A pivot low is at 1.0077. Further support is at .9955.

The 100-day exponential moving average caps at 1.0200 and the 21-day exponential moving average at 1.0254.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Bullish

LONG-TERM: Sideways