Coverage of all major currencies and the US Dollar Index.
LINGLING WEI writes from Beijing:
The president of China’s giant sovereign-wealth fund warned Japan against using its neighbors as a “garbage bin” by deliberately devaluing the yen, joining a growing number of Chinese officials sounding alarms about a potential currency war.
Read more at CIC President Warns Japan on Currency Devaluation – WSJ.com.
The euro broke medium-term support at $1.32 and the rising trendline against the greenback. While this indicates trend weakness it does not necessarily mean reversal to a primary down-trend. Completion of a 63-day Twiggs Momentum trough above zero would suggest that the trend is intact — and an advance to $1.42* is on the cards.
* Target calculation: 1.36 + ( 1.36 – 1.30 ) = 1.42
Pound sterling broke long-term support at $1.53 against the greenback, offering a long-term target of $1.43*. Fall of 63-day Twiggs Momentum below -5% (its 2011 low) would strengthen the signal.
* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43
Against the euro, the pound is testing support at €1.15. 63-day Twiggs Momentum well below zero suggests a strong down-trend. Failure of support would offer a target of the 2011 low at €1.10.
The Aussie Dollar respected primary support at $1.015. Recovery above $1.03 and the declining trendline would suggest another rally to test $1.06. Reversal below $1.02 would warn that primary support is under threat.
Failure of primary support would offer a target of $0.96*. Oscillation of 63-day Twiggs Momentum close to zero, however, suggests a ranging market.
* Target calculation: 1.01 – ( 1.06 – 1.01 ) = 0.96
The Canadian Loonie by contrast is in a strong primary down-trend against the greenback, headed for a test of $0.96. Falling 63-day Twiggs Momentum suggests that medium-term support at $0.97/$0.98 is unlikely to hold.
The US dollar has broken its long-term declining trendline against the Japanese Yen, suggesting that the 30-year decline is over and the greenback likely to appreciate for the foreseeable future. Follow-through above ¥100 would confirm, offering a target of ¥120*.
* Target calculation: 100 – ( 100 – 80 ) = 120
The Euro retraced to test support and the rising trendline at $1.32. Respect would indicate a primary advance with a target of $1.42*. 63-Day Twiggs Momentum well above zero suggests continuation of the primary up-trend. Failure of support at $1.32, however, would indicate a bull trap — with a target of $1.26.
* Target calculation: 1.37 + ( 1.37 – 1.32 ) = 1.42
The Aussie Dollar is headed for a test of primary support at $1.015 on the weekly chart. Failure of support would offer a target of $0.96, while respect would signal another attempt at $1.06. Reversal of 63-day Twiggs Momentum below zero suggests a downward breakout.
The pound broke support at €1.15 against the euro, signaling a test of the 2011 low at €1.10.
The Dollar Index rallied to test medium-term resistance at 81. Breakout above 81.50 would test the 2012 high at 84*. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend.
* Target calculation: 81.5 + ( 81.5 – 79 ) = 84
Houses & Holes at Macrobusiness writes:
Adding a couple of $100 million to industry innovation support is just not going to cut it. Our authorities should do exactly what the rest of the world is doing. Go to the G20 and join the chorus of indignity directed at currency manipulation, come home and drive down using every available tool. That is essentially what the recommendations of the Manufacturing Taskforce aimed at doing. If you think nothing can be done, ask yourself, why are we the only ones not doing it?
Read more at Industry policy cannot offset the Australian dollar | | MacroBusiness.
Sterling retracement respected resistance at $1.58 and the pound is now headed for a test of primary support at $1.53*. Reversal of 63-day Twiggs Momentum below -5% would warn of a downward breakout, offering a target of $1.43.
* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53
The fall against the euro is even more dramatic. The brief rally to $1.18 was snuffed out and short-term support at €1.15 is not secure. Expect a test of the 2011 low at €1.10.
The Aussie Dollar retreated above its former support level at $1.03 on the daily chart. Breakout above $1.04 — and the declining trendline — would indicate a bear trap, while reversal below $1.03 would test primary support at $1.015. Retreat of 63-day Twiggs Momentum below zero would favor a down-swing.
* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00
The Euro retreated below its new support level at $1.35 on the weekly chart. Expect a test of $1.32 and the rising trendline. Respect would indicate a primary advance with a target of $1.42*. Rising 63-day Twiggs Momentum (above zero) suggests continuation of the primary up-trend. Failure of support at $1.32, however, would indicate a bull trap — with a target of $1.27.
* Target calculation: 1.37 + ( 1.37 – 1.32 ) = 1.42
