The US market seems to enjoy appetite for risk today, despite the fragmented inter-market picture overnight. So, if this continues today then a more sustained decline of the foreign currency futures is off the table. The foreign currency futures open up in the US, with the Swissy at a new high for the uptrend and the US indexes are up in pre-open market. Yet, the Asia/Pacific stock markets closed mostly down, the European bourses are trading lower across the board, while the gold/oil spread is up. The Eurozone data was generally good, with most of the IFO report showing increases. The US economic agenda features the volatile durable goods orders and the new home sales reports. There is increasing concern about the position of the BoJ vis-à-vis the once again rising yen during the US session; Kyodo News cited an unidentified market source as saying Japan had sold its currency earlier today to protect exporters. However, this should become more of an issue in Asia on Monday. Only if the yen surges later today would the BoJ ask the Fed to intervene on its behalf; this is less likely.
Given the strong opening in the US, the short-term outlook for most of the foreign currency futures turned sideways to slightly bullish. The medium-term outlook is sideways for the euro, pound and Canadian dollar and bullish for the yen, Swiss franc and Australian dollar. My model is long on the Dow Jones CME FX$INDEX and the European and commodity currencies, and short yen.
This Analysis Is Based On My Books, As Follows:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004
Overnight:
Australia: The Reserve Bank of Australia sold a net A$397 million in the FX market in August
Japan: No data
German business confidence improved unexpectedly to 106.8 in September from 106.7 in August, IFO institute survey data showed. The index for current situation climbed to 109.7 in September but the expectations index fell to 103.9.
France: Gross Domestic Product for the second quarter was revised up to 0.7% from 0.6% estimated earlier.
Italy: Retail sales were unchanged in July. Sales had risen 0.5% in June.
UK: No data
Today’s Economic Calendar:
EUR- December
Luca Model: Long since September 13
The overbought December euro opens stronger, if still in an inside range, after falling on Thursday. The euro is now challenging the new high for the uptrend that was put in on Wednesday. More information is needed here, but the short-term outlook is now sideways to slightly bullish. The medium-term outlook is bullish and my model is still long.
A pivot high is 1.3437 – this is a key level. Further resistance is at 1.3500 and 1.3565.
Initial support is at 1.3362. The next floors are 1.3282,1.3250 and 1.3212.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bullish (overbought)
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
JPY - December
Luca Model: Short since September 15
The December Japanese yen opens virtually unchanged in the US after reversing from a three-day low reached earlier in the day. The losses were inflicted by said BoJ intervention. The short-term outlook is sideways with upside bias. The medium-term outlook is bullish but my model is still short. Will the BoJ stay put?
Immediate resistance is at 119.03. Further resistance is at 119.30. The high of the uptrend is 120.77.
Initial support is at 118.05 from the 21-day moving average. The next floor is 117.48. Below 117.06, the 55-day moving average follows at 116.66.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish?
LONG-TERM: Sideways
GBP - December
Luca Model: Long since August 13
The December pound reversed Asian losses and opens higher in an inside range after spiking to a one ½-month high on Thursday. The short-term outlook is sideways to slightly bullish. The medium-term outlook is sideways and my model is long.
Immediate resistance is at 1.5734. Further resistance is at 1.5770 and 1.5816. The top of the uptrend is 1.5985.
Initial support is at 1.5684. Below 1.5625, the 21-day moving average follows at 1.5558. Distant support is at 1.5427.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF - December
Luca Model: Long since September 21
The December Swiss franc opens on a firm note after marking to a new high for the uptrend. Thus, the incipient bearish reversal is gone. The short-term outlook is slightly bullish. The medium-term outlook is bullish and my model went long.
The high of the uptrend is 1.0227. Further resistance is at 1.0253 and 1.0296. Distant resistance looms at 1.0420.
Good support is at 1.0126. The next floor is 1.0077. Below .9963, the next floor is .9923.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
CAD – September
Luca Model: Long since September 21
The December Canadian dollar opens higher in an inside range after falling for two days and after finding support from the bottom of the Ichimoku cloud. The short-term outlook is sideways to slightly bullish. The medium-term outlook is sideways and my model is still long.
Thursday’s high is .9705 and Wednesday’s high is at .9794. Distant resistance is at .9868.
The 21-day moving average supports at .9645. There is additional support at .9609 and .9549.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Long since August 27
The severely overbought December Australian dollar reversed early losses and opens up in the US after tumbling on Thursday and marking a fresh high for the uptrend on Wednesday. With no confirmation, the odds of a medium-term peak are dwindling very quickly. The short-term outlook is slightly bullish. The medium-term outlook is bullish and my model is long.
The high for the uptrend is .9504. Further resistance is at .9581 and .9650.
Immediate support is at .9397. The next floors are .9366, .9332 and .9232.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
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