The appetite for risk improved markedly on Tuesday due to decent US data and earnings, and hopes the European Union’s leaders will be able to deal with Spain and Greece’s debilitating debt later this week. The Financial Times reported that Spanish government is prepared to officially request a bailout, but the plan is being delayed due to external factors including its possible influence on the decision of other Eurozone countries.
All of the European and commodity currencies but the Canadian dollar closed up and the yen further down. The US stock markets advanced. Gold, oil and silver ended a little higher.
The short-term outlook for most of the European and commodity currencies is sideways. 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: Consumer Price Index rose 0.6% in September, the same as in August. The core CPI edged up 0.1% for a third month.
- US: Net long-term TIC flows rose to $90.0 billion in August from $67.2 billion in July. Total net TIC flows rose to $91.4 billion from $74.0 billion.
- US: Industrial production rose September after sliding a revised 1.4% in August. Capacity utilization edged up to 78.3% from 78.0%.
- US: The NAHB Housing Market Index rose to 41 in October from 40 in September.
- Canada: Canadian portfolio investment in foreign securities rose C$1.69 billion in August after falling C$4.56 billion in July.
Today's economic calendar
- Australia: Westpac Leading Index for August
- Japan: Machine tool orders for September
EUR – December
Luca Model: Short since September 20
The December euro rose to an 11-day high on Tuesday. It is trading above the 21-day exponential moving average and challenging the resistance line declining since September 17. 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. The medium-term outlook is bullish but my model is short.
Initial resistance is at 1.3080. The top of the uptrend is 1.3183.
The 21-day exponential moving average supports at 1.2928. Further support is at 1.2850 and 1.2775.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – December
Luca Model: Short since September 28
The December Japanese yen extended Monday’s losses and ended at a four-week low. The trend line rising since June 25 was briefly penetrated. It is trading below the 200-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 is short.
Immediate support is at 1.2630. A pivot low is at 1.2565.
The 100-day exponential moving average resists at 1.2721 and the 21-day exponential moving average caps at 1.2771. Further resistance is at 1.2836.
INDICATORS
Fast stochastics: Bearish
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 rose to an eight-day high and closed above the 21-day exponential moving average. 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. The medium-term outlook is sideways and my model is short.
Initial resistance is at 1.6160. An intermediate peak is at 1.6269.
The 21-day exponential moving average supports at 1.6081. Further support is at 1.6010. The 55-day exponential moving average supports at 1.5975. Distant support is at 1.5865.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF – December
Luca Model: Short since September 20
The December Swiss franc rose to a four-week high after bouncing off the 21-day exponential moving average on Monday. The rally broke above the 200-day exponential moving average. The franc peaked at a new high for the uptrend on September 14 and bottomed at a 19-month low on July 24. It has been trading a rising channel since late July.
The short-term outlook is sideways. The medium-term outlook is bullish but my model is short.
A pivot high is at 1.0838. Further resistance is at 1.0905.
The 200-day exponential moving average supports at 1.0747 and the 21-day exponential moving average at 1.0694. The next support is at 1.0633.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – December
Luca Model: Short since September 17
The December Canadian dollar sank to a near two-week low. The loonie is trading around the 55-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 sideways. The medium-term outlook is bullish but my model is short.
Immediate support is at 1.0100. Further support is at .9990.
The 21-day exponential moving average caps at 1.0176. Further resistance is at 1.0240.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Short since September 28
The December Australian dollar ended slightly higher after bouncing off a three-day low on Monday. The decline reached a three-day low. It bottomed at a one-month low on October 8. 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.
The 21-day exponential moving average caps at 1.0232. Further resistance is at 1.0365.
Immediate support is at 1.0150. The 200-day exponential moving average supports at 1.0127. A pivot low is at 1.0077.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
