Back to Market Commentary by Product Group

November 20, 2009 8:50 am CST

US FX FUTURES REPORT

The pound led the European and the commodity currencies down overnight, while the yen climbed up slightly. The pound was hit by news that the UK‘s largest business lobby called for ambitious reductions in the budget deficit to allow the BoE to keep rates low. The European bourses were mostly up, while oil and gold declined very modestly. There is no data due for release in the US today.

I had expected the European and the commodity currencies to recover for at least half a day, and the yen to edge lower, but this outlook has not panned out. The selling pressure should alleviate for the European and the commodity currencies, while the yen should slow its ascent. The medium-term outlook for the foreign currency futures is bullish.

My model is short all the European and the commodity currencies and long yen. My model is long the DJIA and S&P500.

Look for updates on my model’s positions on Twitter: They are free – for now. Then, you will have to subscribe to get the model turns in advance.

Good luck!

Cornelius
www.LucaFXTA.com


Overnight:
   
•    Japan: The Bank of Japan kept its key interest rate at a level close to zero and raised its economic assessment given the recent improvements in the economic conditions. It also said the economy is in deflation for the first time in nearly three years.
•    Germany: The producer price index was unchanged in October after falling 0.5% in September. The PPI fell 7.6% year-on-year in October, same as in the previous month.  
•    Italy: Industrial orders expanded 5.2% month-on-month in September after contracting 8.6% in the previous month. Year-on-year, industrial orders shrank 20.4% in September, slower than a 27.5% fall in August.  
•    UK: New housing registrations rose to the highest level since July 2008 in October in a sign the worst may be over for construction companies, according to the National House Building Council.


Today’s economic calendar:

•    US: No data          
•    Canada: No data

FX FUTURES

December Euro FX Futures

Luca Model: Short since November 19

 

The December euro remained under pressure overnight after falling on Thursday, but was still stuck in Tuesday’s range. Following this weakness, the euro should consolidate. The medium-term outlook remains bullish, even though the euro is trading in a triangle.

Initial support is seen at 1.4877 from the 21-day moving average. The next level is 1.4806. Further support is at 1.4737 from the 55-day moving average. 

Immediate resistance is at 1.4927. The next level is 1.5015. The top of the uptrend is 1.5062. Distant resistance is pegged at 1.5135.


INDICATORS
 
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bullish (overbought)


OUTLOOK

NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Bullish


December Japanese Yen

Luca Model: Long since November 13

 

The December yen struggled higher in an inside range overnight after advancing on Thursday. It should trade sideways for the rest of the day. The medium-term outlook remains bullish.

The top of the upmove is at 112.71. A pivot high is perched at 113.68.

Initial support is at 112.09. The next level is 111.69. The 21-day moving average supports at 111.25 and the 55-day moving average at a distant 110.19.   


INDICATORS
 
Fast stochastics: Bullish
MACD: Bullish
Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

 
December British Pound

Luca Model: Short since November 19

The December pound accelerated this week’s losses on expectations for ongoing low interest rates and sank below the 21-day moving average. Thus, it is no longer overbought. The bullish medium-term outlook is in danger. Following this sell-off, the pound should try to consolidate.    
 
Nearby support is at 1.6521. The next support is at 1.6431. Distant support lies at 1.6365.
 
The 21-day moving average now resists at 1.6562.  Further resistance is 1.6603. This is followed by 1.6688, 1.6744 and 1.6811.    
 

INDICATORS
 
Fast stochastics: Bearish (oversold)
MACD: Sideways
Ichimoku: Bullish (overbought)

OUTLOOK

NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

December Swiss Franc

Luca Model: Short since November 17

The December Swiss franc slipped modestly overnight after falling on Thursday and remains stuck an inside range. Following this additional decline, it should consolidate for the rest of the day. The medium-term outlook remains bullish.

Initial support is at .9796. The next level is .9738. A pivot low is at .9675.     

Immediate resistance is .9866. The next level is .9906. The high of the uptrend is .9979.     


INDICATORS
 
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

December Canadian Dollar

Luca Model: Short since November 19

 

The December Canadian dollar slipped in an inside range overnight after falling on Thursday. In the short term, the loonie should bottom and then recover for at least half a day.

Initial support is at .9381 from the 55-day moving average. The next level is .9295. A pivot low is at .9212.  

The 21-day moving average now resists at .9449. Further resistance is at .9505. Above .9599, strong resistance is at .9637.  


INDICATORS
 
Fast stochastics: Bearish (oversold)
MACD: Sideways
Ichimoku: Sideways
 

OUTLOOK

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish?
LONG-TERM: Bullish

December Australian Dollar

Luca Model: Short since November 19

The December Australian dollar edged lower in an inside range overnight after falling on Thursday. It should put in a bottom soon and then bounce for half a day before the next move down. The medium-term outlook is bullish.

Strong support is seen at .9073. A pivot low is at .8882.

The 21-day moving average is resisting at .9157. The next resistance is pegged at .9196. Further resistance lies at .9283. The high of the uptrend is .9382.  


INDICATORS
   
Fast stochastics: Bearish (bearish divergence)
MACD: Bearish
Ichimoku: Bullish (overbought)  

OUTLOOK

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

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