The appetite for risk is improving ahead of the US open after imploding on Friday, as a win for Spanish Prime Minister Mariano Rajoy in elections in his home region of Galicia was perceived as clearing one obstacle to Madrid seeking international aid. The foreign currencies European and commodity currencies open higher after falling for two days amid concern about earnings and the stubborn Eurozone debt crisis. The yen sank to a three-month low on rising speculation of more monetary easing by the Bank of Japan following a more than 10% drop in Japanese exports in September. Of note, China's top leaders have asked policy think-tanks to draw up their most ambitious economic reform proposals in decades that could curb the power of state firms and give more freedom to the setting of interest rates and the yuan.
The US stock markets collapsed on Friday, the 25th anniversary of Black Monday, but most of the Asia/Pacific stock indexes managed to end slightly higher. The European bourses are little changed, while the US stock markets are up in pre-open trading. Gold, oil and silver are up.
The short-term outlook for the European and commodity currencies turned sideways to slightly bullish. The medium-term outlook for most of the foreign currencies is still slightly bullish. The LGR short-term model is short on yen, sterling and Canadian dollar, and long euro, franc and Australian dollar. Good luck!
Overnight
Japan: The merchandise trade balance showed a deficit of ¥558.6 billion in September from -¥754.1 billion in August.
Australia: The Australian government plans to unveil a series of spending cuts to achieve its goal of returning to a budget surplus this year. In the Mid-Year Economic and Fiscal Outlook the Treasury said the country will log a surplus of A$1.1 billion this year, down from its May forecast of A$1.5 billion.
Eurozone: The aggregate budget deficit fell to 4.1% of GDP in 2011 from 6.2% in 2010.
Germany: The leading economic index decreased 0.3% in August, after falling 0.2% and 0.4% respectively in the previous two months.
Germany: The German economy is likely to face a "significant slowdown" in growth in the final quarter of 2012, the October monthly report from the Finance Ministry revealed.
Today's economic calendar
- No data
EUR – December
Luca Model: Short since October 19
The December euro opens higher in the US after falling for two days. It is trading well above the 21-day exponential moving average. The euro peaked near a four-month high on September 17 and bottomed at an over two-year low in July.
The short-term outlook is sideways to slightly bullish. The medium-term outlook is bullish but my model is short.
Immediate resistance is at 1.3085. Further resistance is at 1.3145. The top of the uptrend is 1.3183.
Initial support is at 1.3015. The 21-day exponential moving average supports at 1.2973. Further support is at 1.2910.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Sideways
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – December
Luca Model: Short since September 28
The oversold December Japanese yen is falling for an eighth day and opens at a 3 1/2-month low. It is trading well 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 sideways my model is short.
A pivot low is at 1.2438. Further support is at 1.2300.
Initial resistance is at 1.2565. Further resistance is at 1.2685. The 21-day exponential moving average resists at 1.2719.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
GBP – December
Luca Model: Short since September 26
The December pound reversed from a 12-day low and opens higher in the US. It remains below 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 to slightly bullish. The medium-term outlook is sideways and my model is short.
The 21-day exponential moving average caps at 1.6075. Further resistance is at 1.6175.
The 55-day exponential moving average supports at 1.5987. Distant support is at 1.5865.
INDICATORS
Fast stochastics: Sideways
MACD: Sideways
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF – December
Luca Model: Short since October 19
The December Swiss franc opens a little higher after falling for two days and climbing to a new high for the uptrend on Wednesday. It is trading well above the 200-day exponential moving average. It has been trading a rising channel since late July. The franc bottomed at a 19-month low on July 24
The short-term outlook is sideways to slightly bullish. The medium-term outlook is bullish but my model is short.
Immediate resistance is at 1.0825. The peak of the uptrend is 1.0861.
The 21-day exponential moving average supports at 1.0731. Further support is at 1.0633.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – December
Luca Model: Short since September 17
The December Canadian dollar opens a weak note around the 100-day exponential moving average after plunging to a two-month low 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 200-day exponential moving average supports at 0.9988. Further support is at .9900.
Immediate resistance is at 1.0105. The 21-day exponential moving average caps at 1.0155. Distant resistance is at 1.0240.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Long since October 16
The December Australian dollar is quiet after falling on Friday and forming a short-term peak on Thursday. The Aussie is trading above the 21-day exponential moving average. It bottomed at a one-month low on October 8 and 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 and my model went long.
The 21-day exponential moving average supports at 1.0253. Further support is at 1.0150.
Immediate resistance is at 1.0363. The next cap is at 1.0430.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
