The appetite for risk imploded ahead of the US open after the FT reported that the ECB has lent dollars to a euro zone bank for the first time since February, suggesting that at least one bank was having difficulties obtaining the dollar funds it required. Adding to the gloom, Morgan Stanley cut its global growth forecast for 2011 and 2012, stating that the US and the euro zone were dangerously close to a recession. Consequently, the European bourses have been plunging, dragging down most of the foreign currency futures, pre-open US stock indexes and oil. Meanwhile, gold and silver are surging. The euro zone situation is a game changer, so the short-term outlook is bearish for most of the major foreign currencies. The Swiss franc and yen should have climbed up, but they remain anchored by fear of intervention. The medium-term outlook for most of the major foreign currencies is sideways. The LGR model is long all the foreign currencies but the Swiss franc and Canadian dollar.
Overnight:
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Japan: Vice Finance Minister for International Affairs Takehiko Nakao are in talks with his BoJ counterpart, Hiroshi Nakaso over the recent gains in the yen.
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Japan: The merchandise trade showed a surplus of 72.48 billion yen in July following the downwardly revised 68.6 billion yen surplus in June.
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Japan: The leading index increased to 103.2 in June from 99.4 in the previous month.
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Eurozone: Construction output fell 11.3% year-on-year in June, after being flat in May.
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France: Rating agency Standard & Poor's confirmed France's AAA rating and stable outlook on Thursday.
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UK: Gross mortgage lending fell 1% percent to GBP 12.6 billion in July.
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UK: Retail sales rose 0.2% percent in July, less than the 0.8% growth in June.
Today?s economic calendar:
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US: Initial jobless claims
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US: Consumer Price Index for July
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US: Leading indicators for July
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US: Philadelphia Fed manufacturing survey for August
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US: Existing home sales for July
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Canada: Wholesale sales for June
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Canada: Leading indicators for July
EUR ? September
Luca Model: Long since August 11
The September euro opens lower in the US on the newest wave of ECB distress after stretching to a three-week high on Wednesday. So far, it has found support from the top of the Ichimoku cloud. The euro is trading again below the trendline declining since May. The short-term outlook is bearish. The medium-term outlook is sideways and my model is long.
Immediate support is at 1.4343. Wednesday?s low is 1.4319. The 21-day exponential moving average supports at 1.4291. Further support is at 1.4215 and 1.4041.
Initial resistance is at 1.4395. Monday?s high is 1.4472 and Wednesday?s high is 1.4512. A distant pivot high is at 1.4652.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
JPY ? September
Luca Model: Long since July 8
The overbought September Japanese yen opens marginally lower in the US on fear of BoJ intervention after advancing on Wednesday. The short-term outlook is sideways to slightly bullish.
The medium-term outlook is sideways and my model is long.
The peak of the uptrend is 131.27. Distant resistance is at 132.22. Initial support is at 130.25. The next floor is 129.55. The 21-day exponential moving average follows at 129.08.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
GBP ? September
Luca Model: Long since August 15
The overbought September pound opens slightly lower in the US after soaring to a three-month high on Wednesday. It rallied for five consecutive days and profit taking should last through the end of the week. The short-term outlook is bearish. The medium-term outlook is sideways and my model is long.
Immediate support is at 1.6445. The next floor is 1.6385. Wednesday?s low is 1.6339.
Thursday?s high is 1.6550 and Wednesday?s high is 1.6590. A pivot high follows at 1.6708.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CHF ? September
Luca Model: Short since August 11
The September Swiss franc opens lower in the US after ending slightly higher on Wednesday, as its safe-haven role in terms of crisis has been shored up recently by fears of intervention. The shortterm outlook is bearish. The medium-term outlook is sideways and my model is short.
Immediate support is at 1.2530. Wednesday?s low is 1.2488. A distant floor is 1.226.
Immediate resistance is at 1.2660. Further resistance is 1.2735. The 21-day exponential moving average resists at 1.2788.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish (oversold)
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
CAD ? September
Luca Model: Short since August 18
The September Canadian dollar opens lower in the US after stretching to as high as a one-week high on Wednesday, thus extending its one-day up and one-day down pattern to seven days. The short-term outlook is bearish. The medium-term outlook is bearish and my model went short.
Initial support is at 1.0130. Further support is at 1.0075 and 1.0020. A pivot low follows at .9980.
The 200-day exponential moving average resists at 1.0150. Further resistance is at 1.0225, 1.2055 and 1.0325.
INDICATORS
Fast stochastics: Bullish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
AUD ? September
Luca Model: Long since August 15 (reversing short since August 2)
The oversold September Australian dollar opens lower in the US, breaking the bottom of a rising wedge, after climbing to a near two-week high on Wednesday. The Aussie remains in the channel rising since March. The short-term outlook is bearish. The medium-term outlook is sideways and my model is long.
The 100-day exponential moving average supports at 1.0395. Further support is at 1.0310 and 1.0215.
The 21-day exponential moving average resists at 1.0481. Wednesday?s high is 1.0557. Further resistance is at 1.0615.
INDICATORS
Fast stochastics: Bullish (overbought)
MACD: Slightly bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
Source: http://www.fxstreet.com/technical/market-view/premarket-analysis/2011-08-18.html
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