Alaron Currency Comment

CHICAGO - Feb 4/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The BP opened higher at 1.9723 and rose to a mid-day Hi of 1.9742, as carry-traders took on more risk and sought higher yields ahead of Thursday's BoE MPC meeting. The 5.50% is still an attractive yield 'over-night' as traders look for that to lower 25bp to 5.25%. Prices retraced to a daily low of   1.9678, before bouncing to a close of 1.9691, up 64 tics. The s/t trend remains 'negative' w/ 'neutral' momentum indicators. A 25bp rate cut would still attract buyers provided the economy could withstand weaker economic data. A lower open may find Support at 1.9665 and 1.9640, while an open above 1.9704 should find Resistance at 1.9729 and 1.9768.

The DX opened lower at 76.550 and   rose to a morning Hi of 75.60, before retracing to a mid-day Lo at our Pivot Level of 74.43. Prices bounced into the close to end the session at 75.490, down 7.5 tics. While futures traders have decreased the chance of a 50bp rate cut at the March 18th FOMC meeting, the Fed is  prepared to rescue the economy from 'jaws' of a recession.  Traders will key on the ISM Non-Mfg. Index to see if it can stay above the 53.0 level. The s/t trend remains 'negative' w/ 'neutral-weak' momentum indicators. A lower open may find Support at 75.410 and 75.335, while an open above 75.505 should find Resistance at 75.580 and 75.675.

The CD opened lower at 1.0002 and rose to a morning Hi of 1.0061 as oil prices rose above $90.00 / bbl as violence in Nigeria threatens to curtail the 500,000 bbls/day supply. Prices traded in the upper range and closed the session at 1.0058, up 3 tics. A global slowing would see less oil usage outside the U.S. and could pressure another rate cut by the BoC   to curtail an ongoing recessionary threat from a slower U.S. economy. A higher open should find Resistance at 1.0079 and 1.0099, while an open below 1.0040 may find Support at 1.0020 and .9981.

The EC opened higher at 1.4813 against the weaker DX, as carry-traders took on additional risk for higher yield, despite the rate meeting on Thursday. While the BoE is expecting a 25bp rate cut, the ECB will probably leave rates 'unchanged' at 4.0% and maintain a 'hawkish' stance against inflation. Prices retraced to a moring Lo of 1.4792, before recovering to a daily Hi of 1.4813 and ending the day at 1.4810, up 22 tics.The s/t trend remains 'positive' w/ 'firm' momentum indicators. While the ECB may leave rates 'unchanged', traders believe it is behind the curve and may feel the 'slowing' effects at a later date and lower rates if needed. A higher open should find Resistance at 1.4827 and 1.4845, while an open below 1.4810 may find Support at 1.4792 and 1.4775.

The JY opened lower at .9389 as carry-traders took on additional risk as equity markets rose and sold JY to purchase higher yielding currencies. Prices retraced to a morning LO of .9373, before rebounding to a mid-day Hi of .9404 as U.S. equity markets retraced. Prices ended the session at .9398, down 24 tics.  The close below the 9-day MA changes the s/t trend to 'negative' w/ 'neutral' momentum indicators. A higher open should find Resistance at .9410 and .9423, while an open below .9392 may find Support at .9379 and .9361.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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