Alaron Currency Comment

CHICAGO - Mar 6/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The BP opened higher at 2.0025 and slid to a morning Lo of 2.0000, as the DX reacted to better than expected Jobless Claims and Pending Home Sales data. Prices rose as the MPC left rates 'unchanged' at 5.25%, climbing to a mid-day Hi at our secondary Resistance level of 2.0090, before trailing lower towards the close and ending the day at 2.0078, up 175 tics. The s/t trend remains 'positive' w/ 'firm' momentum indicators. The 5.25% will continue to attract s/t carry-traders as the yield-gap increases against the DX and JY. A higher open should find Resistance at 2.0112 and 2.0146, while an open below 2.00 56 may find Support at 2.0022 and 1.9966.

The DX opened lower at 73.23 and rose to  a morning Hi of 73.355 after better than expected Jobless Claims and Pending Home Sales. With traders looking at a 72% chance of a 75bp rate cut at the March 18th FOMC meeting, the increasing yield gap against other major foreign currency markets weighed on prices, sending the DX to a mid-day Lo of 72.970, before ending the day at 73.045, down 44.5 tics. The s/t trend remains 'negative' w/ 'over-sold' momentum indicators. Lower rates should continue to weigh on prices. Traders will key on the Payroll Report at 8:30am et, expected to show 15k -20k few jobs. A lower open may find Support at 72.845 and 72.650, while an open above 73.165 should find Resistance at 73.360 and 73.68.

The CD opened higher against the DX at 1.0152 and slid to a morning Lo of 1.0120, before  a better than expected Ivey PMI report sent prices to a morning Hi of 1.0155. Prices drifted lower during the afternoon and ended the day at 1.0143, up 6 tics. Prospects of a slowing economy and further rate cuts should weigh on prices further. A higher open should Resistance at 1.0159 and 1.0174, while an open below 1.0139 may find Support at 1.0124 and 1.0104.

The EC opened higher at 1.5312, before sliding to a morning Lo of 1.5290 as the DX responded to better than expected economic data. Prices rebounded to a morning Hi of 1.5369 after ECB President Trichet announced that rates would remain 'unchanged' at 4.00%, as inflationary concerns outweighed economic slowing. Prices slid to an afternoon Lo of 1.5352, before bouncing higher into the close of 1.5369, up 102 tics.The s/t trend remains 'positive' w/   'over-bot' momentum indicators. Prices at this level could see pressure from 'exporters', but as long as the DX is headed lower, the yield-gap and liquidity should continue to attract. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.5391 and 1.5422, while an open below 1.5341 may find Support at 1.5310 and 1.5260.

The JY opened higher at .9670 and continued higher against the weaker DX, climbing to a mid-day Hi of .9725 as short-covering from carry-traders continued as equity prices in the U.S.continued lower. The proposed 75bp rate cut by the Fed will help over-come the slowing Japanese economy. Japan's Leading Index , the government's broadest indicator of future growth, fell to 30% from the revised 50%  in December. The JY maintained most of the gain through the close, ending the session at .9721, up 85 tics. The BoJ raps up its 2-day rate meeting and should leave rates 'unchanged' at 0.5%. The s/t trend remains 'positive' w/ 'firm' momentum indicators. Will we see the 'slowdown' result in a 'recession'? Longs should tighten 'stops' or buy 'puts' to reduce volatility. A higher open should find Resistance at .9741 and .9760, while an open below .9705 may find Support at .9686 and .9650.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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