The appetite for risk is improving ahead of the US open, as news that Standard & Poor's cut Spain's rating two notches to BBB-, one step from junk status, didn’t come as a surprise. The Australian dollar is leading the foreign currencies higher in part because the People's Bank of China set its yuan midpoint stronger than expected, signaling it may tolerate slight appreciation of the currency.
The Asian stock markets ended mixed. The European bourses are up and the US stock markets are higher in pre-open trading. Gold, oil and silver are up as well.
The short-term outlook for the European and commodity currencies is slightly bullish. 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
Japan: Overall bank lending was up 1.2% on year in September following the 1.1% increase in August.
Japan: Core machine orders fell 3.3% in August following the 4.6% increase in July.
Australia: Consumer inflation expectation rose to 2.6% in October from 2.4% in September.
Australia: The unemployment rate rose to 5.4% in September from 5.1% in August.
Japan: The BoJ Monetary policy meeting minutes showed that members agreed Japan's economic recovery would be delayed considerably compared with April forecast. The BoJ should act now instead of waiting till October 30th if economic downturn already evident.
Japan: The consumer confidence index decreased to 40.1 in September from 40.5 in August.
Germany: The final harmonized index of consumer prices decelerated to 2.1% in September from 2.2% in August y-o-y.
France: The final consumer price index fell 0.3% in September after rising 0.7% in August.
Today's economic calendar
US: Continuing jobless claims (Sep 29)
US: Trade Balance for August
Canada: International merchandise trade for August
Canada: New housing price index for August
EUR – December
Luca Model: Short since September 20
The December euro reversed from a ten-day low and opens higher. It is trading just below 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 slightly bullish. The medium-term outlook is bullish but my model is short.
The 21-day exponentially smoothed moving average caps at 1.2903. The next caps are 1.2935, 1.3005 and 1.3080.
Initial support is at 1.2833. Further support is at 1.2775.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – December
Luca Model: Short since September 28
The December Japanese yen opens off a nine-day high and above the 21-day exponential moving average. 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.
Initial resistance is at 1.2845. An intermediate top is at 1.2922.
Immediate support is at 1.2745. Further support is at 1.2685 and 1.2625.
INDICATORS
Fast stochastics: Slightly 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 opens slightly higher after falling for three days and reaching a 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 slightly bullish. The medium-term outlook is sideways and my model is short.
The 21-day exponential moving average caps at 1.6079. An intermediate peak is at 1.6269.
The 55-day exponential moving average supports at 1.5962. Further support is at 1.5865.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF – December
Luca Model: Short since September 20
The December Swiss franc opens a little higher after reversing from a nine-day low on Wednesday. The franc is trading below 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 slightly bullish. The medium-term outlook is bullish but my model is short.
The 200-day exponential moving average resists at 1.0747. A pivot high is at 1.0838.
Initial support is at 1.0633. Further support is at 1.0585 and 1.0500.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – December
Luca Model: Short since September 17
The December Canadian dollar reversed from a one-week low and opens higher in the US. It is now trading just above the 21-day exponential moving average. 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 slightly bullish. The medium-term outlook is bullish but my model is short.
Initial resistance is at 1.0205. Further resistance is at 1.0256. A pivot high is at 1.0359.
Immediate support is at 1.0100. Further support is at .9990.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Sideways
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Short since September 28
The oversold December Australian dollar is advancing for a fourth day and opens at a nine-day high. It bottomed at a one-month low early on Monday after 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 slightly bullish. The medium-term outlook is bullish but my model went short.
The 21-day exponential moving average caps at 1.0246. Further resistance is at 1.0365.
Immediate support is at 1.0155. A pivot low is at 1.0077.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
