Alaron Currency Comment

CHICAGO - May 1/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened higher at 73.17, dipped to a morning Lo of 73.13 and rose to a mid-day Hi at our secondary Resistance level of 73.525 in 'thin' Holiday trading, as European and Asian markets observe May Day. The 'one & done' theory on rate cuts has attracted institutional buyers as a greater than expected increase in personal spending and rally in equity prices support the move to a daily Hi of 73.585, before  drifting to a close of 73.47,up 75 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Traders will key on the Payroll Report and look for direction  from 'carry-traders' coming back  to a stronger equity market. Will   carry-traders follow the lead of equity traders and take on more 'risk' or stand on the sidelines  until the release of the Payroll Report? We shall see.  Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 73.80 and 74.14, while an  open below 73.24 may find Support at 72.91 and 72.35.  

The BP opened lower at 1.9808 and retraced against the DX to a morning Lo of 1.9654 in thin May Day trading. The BP rose against the EC after the BoE said in its 'financial stability report' that risk appetite will return gradually in the coming months. As the DX rallied, prices traded along the lower initial Support level of 1.9650 as we begin the afternoon session. Prices rose towards the close and ended the session at 1.9678, down 151 tics. The reversal-close below the 9-day MA changes the s/t trend to 'negative' w/ 'neutral' momentum indicators. Will the 5.00% yield  attract traders at these levels? A weaker Payroll Report could see higher prices. A lower open may find Support at 1.9604 and 1.9529, while an open above 1.9728 should find Resistance at 1.9803 and 1.9927.    

The CD opened lower at .9890 against the stronger DX. Weaker 'commodity' prices and slowing economic conditions may see further need for economic stimulus, according to BoC Governor Mark Carney. Prices fell to a morning Lo of .9761, before bouncing into the afternoon session and rising towards the close to end the day at .9812, down 142 tics. Lower commodity prices, lower revenues, weaker economic forecast and lower rates, should weigh on prices. The reversal-day close below the 9-day MA changes the s/t trend to negative w/ neutral momentum indicators. A lower open may find Support at .9737 and .9662, while an open above .9836 should find Resistance at .9911 and 1.0010.

The EC opened lower at 1.5485 and touched a morning Hi of 1.5493, before retracing to a mid-day Lo at our Weekly initial Support level of 1.5401 and bouncing into the afternoon session. Prices rose as shorts covered, sending the EC higher towards the close and ending the session at 1.5430, down 179 tics.The s/t trend remains negative w/ weak momentum indicators. The Payroll Report and carry-traders will look for follow-thru buying of the DX, otherwise the EC should correct and recover. A lower open may find Support at 1.5349 and 1.5268, while an open above 1.5482 should find Resistance at 1.5563 and 1.5696.

The JY opened lower at .9629 and rose to morning Hi of .9668, before retracing to a mid-day Lo at our initial Support level of .9584. Prices bounced towards the close and ended the session at .9606, down 44 tics. The s/t trend remains negative w/ weak momentum indicators. The Support level of .9560 has held over the last week, despite weak economic data. We could find some technical buying at the 61.8% Fib level on any test and close above .9503. A lower open may find Support at .9566 and .9527, while an open above .9625 should find Resistance at .9664 and .9723. Shorts should tighten 'stops' or buy 'call' to reduce exposure.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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