Alaron Currency Comment

CHICAGO - Feb 11/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The CD opened higher at .9994 against a weaker DX as concerns that Venezuela may not sell oil to the U.S., sending energy price  and the CD higher. Prices rose to our Pivot level of 1.0000, before retracing to a morning Lo of .9954, before rebounding into the afternoon session. Earlier comments from BoC Governor Carney that  lower rates may be needed to cope with the global slowing weighed on prices.The CD ended the session at .9975, down 12 tics.  The s/t trend remains 'negative' w/ 'neutral' momentum indicators. Higher energy/metals prices could  see a close above the 9-day MA  and change the s/t trend to 'positive'.  We will see how the U.S. slowing effects 'exports', before the BoC  cuts rates. A lower open may  find Support at .9953 and .9932, while an open above .9977 should find Resistance at .9998 and 1.0022.  

The DX opened   lower at 76.62 as concerns that the 'sub-prime' woes of a number of financial institutions is not over, according to a  statement from the recent G-7 meeting in   Tokyo. Further interest rate cuts and tax incentives may be needed to firm up the balance sheets along with more infusions of cash. Increased volatility in the equity markets sent carry-traders running for cover and taking profit/risk off the table and covering JY shorts. As U.S. equity prices rallied off their low, the DX rose to a mid-day Hi of 76.86, before drifting lower in the afternoon session and   ending the day at 76.72, down 10 tics.The s/t trend remains 'positive' w/ 'neutral' momentum indicators. Traders will find it challenging to bid the DX higher in the face of further rate cuts, unless yield gaps tighten. A higher open should find Resistance at 76.90 and 77.085, while an open below 76.675 may find Support at 76.49 and 76.265.

The BP opened higher at 1.9434 as a higher than expected PPI report showed an increase of 5.7% y/y. With the cost of raw materials increasing at a 19.1% annual rate, inflation concerns at the BoE  will need to be addressed. Prices dipped to a morning Lo of 1.9395, before rebounding to a mid-day Hi at our secondary Resistance level of 1.9476. The BP drifted lower towards the close to end the session at 76.72, down 10 tics. Should the Nikkei and FTSE move higher, carry-traders may increase risk and  take a 'day-trade' at 5.25%. A higher open should find Resistance at 1.9490 and 1.9523, while an open below 1.9443 may find Support at 1.9410 and 1.9363.

The EC opened higher at 1.4518, touched a morning Hi of 1.4519 and retraced to a morning Lo of 1.4467 as concerns that 'sub-prime' woes may increase write-offs in two of the largest German banks could keep traders in the risk-aversion mood for the present. The G-7 meeting sent out a subtle message that problems will continue in the financial sector that will need to be addressed individually. Prices bounced into the close and ended the session at 1.4501, up 9 tics. The s/t trend remains 'negative' w/ 'weak' momentum indicatorss. The 'hawkish' tone of Trichet may have been toned down and open the door for a rate cut. We will see if traders take out the Target Lo of 1.4432 on 2/7. A higher open should find Resistance at 1.4524 and 1.4548, while an open below 1.4496 may find Support at 1.4524 and 1.4548.

The JY opened higher at .9371 after weakness in the equtiy markets and comments from the G-7 confernence raised a 'red' flag to carry-traders. Traders took profit/risk off  the table and covered JY shorts, sending  prices to a morning Hi of ..9415, before retracing  lower towards the close to end the session at /9373, up 37 tics.  The s/t trend remains 'negative' w/ 'neutral' momentum indicators. A higher Nikkei could see carry-trading activity, which should weigh on prices.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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