Alaron Currency Comment

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

The CD opened higher at 1.0115 and rose to a morning Hi of 1.0125, ahead of the BoC decision to cut rates 50bp to 3.50%. Prices retraced to a mid-day Lo of 1.0029 as talk of further 'monetary stimulus' may be needed weighed on prices. The CD bounced higher during the afternoon session and ended the day at 1.0042, down 34 tics. The close below the  9-day MA changes the s/t trend to 'negative' w/ 'neutral' momentum indicators. Weaker energy/metals prices and the prospect of lower rates ahead could weigh futher on prices. Finance Minister Jim Flaherty believes the 'steps to cut taxes' will help the economic fundamentals.A lower open may find Support at 1.0001 and  .9960, while an open above 1.0063 should find Resistance at 1.0104 and 1.0166.  

The DX opened lower at 76.61 and slid to a morning Lo of 76.51 ahead of Fed Chrm.Bernanke's speech about the 'Foreclosure' problem facing homeowners. Prices rose to a morning Hi of 73.81, before drifting lower into the close and ending the day at 73.695, down 5 tics.The s/t trend remains 'negative' w/ 'over-sold' momentum indicators. Traders will key on Friday's Payroll Report for further evidence of strength/weakness in the Labor market and the need for 50bp or 75bp rate cut on March 18th. A higher open should find Resistance at 73.83 and 73.97, while an open below 73.67 may find Support at 73.53 and 73.37.

The BP opened higher at 1.9858 and rose to a morning Hi of 1.9877  against a weaker DX. Prices retraced to a mid-day Lo of 1.9820 as concerns over the U.S. slowdown effected the outlook for U.K.economy. With Canada lowering rates by 50bp to contend with  lower exports, the U.K. may indeed face the same  problem and look to lower rates.Prices drifted into the close of 1.9842, up 11 tics.The s/t trend remains 'positive' w/ 'topping' momentum indicators. Longs  should tighten 'stops' or buy 'puts' to reduce exposure.A higher open should find Resistance at 1.9875 and 1.9907, while an open below 1.9839 may find Support at 1.9807 and 1.9771.  

The EC opened higher at 1.5207 and rose to a morning Hi of 1.5243 against the weaker DX, CD and AD. A higher than expected PPI of   +0.8% m/m, +4.9% y/y, offset the weaker Q4 GDP of +0.4% and kept the possibility of keeping rates on 'hold' at the 4.0% level. Prices slid to a mid-day Lo of 1.5185, before bouncing towards the close to end the day at 1.5202, up 14 tics. The s/t trend remains 'positive' w/ 'over-bot' momentum indicators.Another attempt to challenge the Target Hi of 1.5270 could set the tone for some 'weak' longs to take profit/risk off the table if it can't close higher. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 1.5177 and 1.5152, while an open above 1.5210 should find Resistance at 1.5235 and 1.5268.

The JY opened the session higher at .9713 and rose to a morning Hi of .9750 as carry-traders took further profit/risk off the table as equity markets traded lower in Europe. Weakness in other major foreign currency markets supported the JY before it drifted lower with U.S. equity markets. Prices ended the day at .9705, unchanged.The s/t trend remains 'positive' w/ 'over-bot' momentum indicators. With the Japaneses economy drifting along and rates at 0.5%, I look for 'exporters' to pressure the MOF to contain prices and avoid any a run to 100. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at .9684 and .9663, while an open above .9717 should find Resistance at .9738 and .9771.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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