The appetite for risk increased only in the FX space ahead of the US open, but lagged in the other asset classes. Half of the core foreign currencies open up after most of them marked time on Monday. The oversold yen recovered nearly 1% and the Australian dollar rallied on expectations that the BoJ and Abe’s policies will stimulate growth in Japan. The euro and franc were lifted by the strong ZEW report, but the euro failed to hold on to its gains. Even the pound opens off a five-month low, which it reached on Monday on concern over the future role of the UK in the European Union. The Asia/Pacific stock indexes ended mixed. The European bourses are divergent, while the US stock markets are lower in pre-open trading. Gold, oil and silver are barely changed.
The short-term outlook for most of the foreign currencies is sideways to slightly bullish, though most of the gains have already been seen. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies.
Good luck!
Overnight
Japan: The Bank of Japan has pledged an open-ended commitment to buy assets. Both the government and the central bank have agreed on to a 2% inflation target and the Bank of Japan kept overnight call rate target unchanged at 0-0.1% by unanimous vote.
Japan: The all industry activity index slipped 0.3% in November after rising 0.2% in October.
Japan: The leading indicator slipped to 92.1 in November from 92.8 in October.
Eurozone: The ZEW survey - economic sentiment soared by 23.6 to 31.2 in January.
Germany: The ZEW indicator of economic sentiment surged from 6.9 to 31.5 in January, while the assessment of the current economic situation improved slightly by 1.4 to 7.1.
UK: The budget deficit widened to GBP 15.4 billion in December from GBP 14.8 billion in the prior year.
UK: The CBI industrial trends survey - orders fell to -20% in January from -12% in December.
UK: The net borrowing narrowed to £13.208B in December from £14.266B in November.
Today's economic calendar
US: Existing home sales change for December
Canada: Retail sales for November
EUR – March
The LGR Model: Short since January 18
The March euro opens off its worst levels in the US following the strong ZEW report after consolidating further after falling on Friday. The euro had peaked at an 11-month high on January 14. It is trading above the 21-day exponential moving. The euro bottomed at an over two-year low in July.
The short-term outlook is sideways. The medium-term outlook is slightly bullish but the LGR model is short.
Immediate resistance is at 1.3413. Further resistance is at 1.3475.
Initial support is at 1.3275. The 21-day exponential moving average supports at 1.3232.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – March
The LGR Model: Long since January 18
The oversold March Japanese yen opens up after marking a near 2 1/2-year low on Monday. The yen is trading below the neckline of a long-term head–and-shoulders pattern and the target is the 1.0500 area. It is moving well below the 21-day exponential moving average. The yen had peaked at a seven-month high on September 13.
The short-term outlook is sideways to slightly bullish. The medium-term outlook is bearish but the LGR model is long.
Immediate resistance is at 1.1320. Further resistance is at 1.1396 and 1.1522.
Initial support is at 1.1205. Further support is at 1.1086 and 1.1000.
INDICATORS
Fast stochastics: Bullish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
GBP – March
The LGR Model: Short since January 14
The March pound opens little changed after sinking to as low as a five-month low on Monday. The main reason for this weakness is that British Prime Minister David Cameron will deliver a long-delayed speech on the European Union on Wednesday, saying that he wants to try to claw back from the 27-nation bloc.
The pound is slowly approaching the bottom of a long-term (four-year) triangle in the 1.56 area. It is trading well below the 21-day exponential moving average and is oversold. The pound had marked a 17-month high on January 2 and bottomed on June 1.
The short-term outlook is sideways. The medium-term outlook is sideways and the LGR model is short.
Initial resistance is at 1.5945. The 21-day exponential moving average caps at a distant 1.6049. Immediate support is at 1.5800. Further support is at 1.5765 and 1.5625.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF – March
The LGR Model: Short since January 14
The March Swiss franc opens off a one-week high in the US after marking a near two-month low on Friday. It is trading below the 21-day exponential moving average. The franc had marked a seven-month high on December 20 and a 19-month low on July 24. It is trading in a medium-term symmetrical triangle.
The short-term outlook is sideways to slightly bullish. The medium-term outlook is slightly bullish but the LGR model is short.
Immediate resistance is at 1.0790. The 21-day exponential moving average caps at 1.0822. Further resistance is at 1.0900.
Initial support is at 1.0657. Further support is at 1.0535.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
CAD – March
The LGR Model: Short since January 18
The March Canadian dollar opens under pressure in the US after falling to a 2 1/2-week low on Friday. The loonie had marked a 2 ½-month high on January 11. The Canadian dollar had marked a high for the uptrend on September 14 and a significant bottom on June 1. The short-term outlook is sideways. The medium-term outlook is sideways and my model is short.
Initial support is at 1.0040. A pivot low is at .9919.
The 21-day exponential moving average caps at 1.0101. Further resistance is at 1.0175 and 1.0230.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
AUD – March
The LGR Model: Long since January 2
The March Australian dollar opens off an 11-day high in the US. It is trading above the 21-day exponential moving average. The Aussie marked a new high for the uptrend on January 10. The short-term outlook is slightly bullish. The medium-term outlook is sideways and my model is long.
Immediate resistance is at 1.0547. Further resistance is at 1.0605.
The 21-day exponential moving average supports at 1.0454. The 55-day exponential moving average follows at 1.0385.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
