Alaron Currency Comment

CHICAGO - Apr 3/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened higher at 73.13 and touched a morning Hi of 73.16, before a weaker than expected Jobless Claims report showed an increase of   +38,000 new names on the unemployed  rolls vs the expected 'unchanged' level last week. Prices retraced throughout  the day as traders may be looking for  Friday's Non-Farm Payroll Report to be weaker than  expected. A previous ADP private sector report, built  expectations that the -50,000 potential decrease in payrolls  may be too high, but todays' data  saw traders running for higher yields. Prices dropped to a mid-day Lo of 72.47 and ended the session at 72.485, down 18.5 tics.  The s/t trend remains 'positive' (above the 9-day MA of 72.481) with 'neutral' momentum indicators. Longs should tighten 'stops' or buy 'puts' ahead of the Non-Farm Payroll report, to reduce exposure. A lower open may find Support at 72.25 and 72.01, while an open above 72.705 should find Resistance at 72.94 and 73.39.        

The BP opened weaker at 1.9721 on concerns that further slowing in the economy and weaker housing data will lead to a much anticipated rate cut at the next MPC meeting. Weaker European equity markets saw early carry-trade gains taken off the table, before the DX slide bolstered most other major foreign currency markets. Prices rose throughout the session and hit a daily Hi of 1.9871, before sliding towards the close to end the day at 1.9843, up 74 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ 'weak' momentum indicators. The s/t yield is still attractive to carry-traders, but the slowing economic conditions should see lower rates ahead. A higheropen should find Resistance at 1.9904 and 1.9966, while an open below 1.9810 may find Support at 1.9748 and 1.9654.

The CD opened higher at .9850 and slid to a morning Lo of .9821, in concert with the DX, as an increase in Jobless Claims sends negative connatations to its nothern trading partner. A 5-month Hi in the SP/ TSX Composite Index and a boost in energy/metals markets helped the CD separate from the DX, hitting a daily Hi late in the session of .9962, before slidding to a close of .9950, up 131 tics. The s/t trend remains 'positive' w/ 'improving' momentum indicators. Longs should take advantage of the move to tighten 'stops' or buy 'puts' to reduce exposure.Rate cuts are still on the table. A higher open should find Resistance at .9988 and 1.0027, while an open below .9917 may find Support at .9878 and .9807.

The EC opened lower at 1.5479 as lower Retail Sales in the EZ may lead to pressure on the ECB to lower rates as the slow-down hits Europe. Subprime losses to Germany's second largest State Bank, BayernLB totaling appx.$6.7B also weighed on prices and sent the EC to a mornng Lo of 1.5478, before rebounding on DX weakness to a daily Hi of 1.5634. Prices slid towards the close to end the session at 1.5628, up 18 tics. The reversal day keeps the s/t trend 'positive' w/ 'neutral' momentum indicators. With the DX anticipating another 25bp-50bp rate cut at the April 30th FOMC meeting, a rate cut of 25bp by the ECB would maintain the current yield-gap of 175bp.A weaker Payroll report could send the EC higher. A higher open should find Resistance at 1.5682 and 1.5736, while an open below 1.5580 may find   Support at 1.5526 and 1.5424.

The JY opened lower at .9753 as carry-traders took on more risk along with equity managers and bought higher yielding foreign currencies. As equity prices weakened in Europe, carry traders took s/t profit/risk off the table sending the JY to a morning Lo of .9750. A turn-around in the DX sent the JY up to a daily Hi of .9830, before drifting lower towards the close, ending the  day at .9809, up 1 tic. The s/t trend  remains 'negative' w/ 'weak' momentum indicators. Traders will key off the Payroll Report and look to the U.S.consumer to continue to support the Japanese exporters. A higher open should find Resistance at .9843 and .9876, while an open below .9796 may find Support at .9763 and .9716.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.