FX: The US stock indexes are up as well in pre−open market
The appetite for risk increased overnight: the European and commodity currencies are up, the yen is down, the Asia/Pacific stock markets closed up, the European bourses are up and the gold/oil spread is down. The US stock indexes are up as well in pre-open market.
The euro/dollar has recovered more than half of the losses incurred between May 21 and June 7 and the Wave 3 of the downtrend is in place, as I had suspected. The initial target of Wave 4 is 1.2497. However, only a close above the 21-day moving average would squeeze out more short positions. Elsewhere, be on the lookout for the double bottom in the Aussie.
The short-term outlook is bullish for the European and commodity currencies and mildly bearish for the yen. The medium-term outlook turned sideways for all of the foreign currencies futures. My model is long all of the European and commodity currencies and short yen.
Analysis Based On:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
Overnight:
Japan: Japan is at a risk of facing the kind of crisis currently raging through Europe if it fails to bring down its soaring debt levels, the country's new Prime Minister Kan warned.
Japan: The final industrial production held at +1.3% in April, slightly larger than +1.2% in March. Seasonally adjusted capacity utilization in April remained flat after rising 0.6% in March.
Japan: Japanese large manufacturers' sentiment improved during April to June quarter: The business survey index for large manufacturers rose to 10 points from 4.3 points in the last quarter; the non-manufacturers' sentiment index rose to 0.9 points from -6.3 points in the previous quarter, and the business sentiment among all large industries climbed to 4 from 2.4.
Eurozone: The industrial output rose a more than expected 0.8% in April, slower than the 1.5% growth in the previous month, revised from the 1.3% rise reported initially.
Germany: The number of startups declined 1.8% to 41,000 large businesses in the first quarter on a yearly basis.
Switzerland: The producer and import price index rose 0.3% in May, down from 0.6% in April. Annually, producer and import prices rose 1.4% in May from a 0.8% rise in April.
UK: The Confederation of British Industry raised its growth forecast for 2010 to 1.3% in 2010, up from 1% in its previous March forecast. Its estimate for 2011 remains unchanged at 2.5%.
UK: Britain's new independent fiscal watchdog, the Office for Budget Responsibility, has revised down the GDP forecasts for the UK economy to 2.6% in 2011 from the previous Labour government's 3.25% growth estimate. In addition, Britain’s budget deficit will narrow more than expected even as the economy grows more slowly than the previous government forecast.
UK: The recovery in the British economy and the resilience of inflation raises the question that how long the Bank of England can continue its expansionary monetary policy,
