Alaron Currency Comment

CHICAGO - May 5/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The EC opened higher at 1.5430 and rose to 1.5460 after ECB President Trichet told G-10 finance ministers that world growth will continue to grow and that inflation risks are significant, suggesting that any thought of a rate cut at this Thursday ECB Policy Meeting were off the table. Prices slid to a morning Lo of 1.5395 after the U.S. ISM non-mfg index rose greater than expected to 52.0 vs.49.8 in March. As the DX retraced, the EC rebounded to a daily Hi of 1.5490, before drifting to a close of 1.5468, up 82 tics. The s/t trend remain 'negative' w/ weak momentum indicators. Traders will key on Thursday's ECB rate meeting looking for 'hawkish' comments from ECB President Trichet to confirm the 'inflation' concerns and leave rates unchanged at 4.00%.

The DX opened lower at 73.57 and rose to a morning Hi of 73.72 on a better than expected ISM non-mfg index report showing an increase to 52.0 vs. 49.8 in March. Prices retraced in thin Holiday trading, U.K. and Japan closed, as weaker equity prices and higher oil prices add to 'stagflation' concerns. The DX slid to a daily Lo of 73.29, before bouncing into the close of 73.37, down 32 tics. The s/t trend remains 'positive' w/  turning momentum indicators. Traders will look  for clues from Fed Chrm. Bernanke's speech tonight regarding 'housing sectors problems'. A lower open may find Support at 73.20 and 73.03, while an open  above 73.46 should find Resistance at 73.63 and 73.89.  

The BP opened lower at 1.9626 and retraced to a morning Lo of 1.9601 after the ISM report, before rebounding to a daily Hi of 1.9670 as the DX weakened throughout the session in thin Holiday trading. With the BoE MPC meeting on Thursday. Traders expect the BoE will leave rates 'unchanged' at the 5.00% level, before cutting rates mid-summer. The yield-gap between the DX, JY and SF are still attractive to s/t carry traders who will take on additional risk as equity traders drive prices higher and take profit/risk off when equities retrace. Prices slid to a close of 1.9659, down 24 tics.  The s/t trend  remains 'negative' w/ neutral momentum indicators. Prices have traded in a 4 cent trading range with extreme moves in either direction. Traders will look for  direction from Thursday's BoE MPC meeting where rates are  forecasted to remain 'unchanged' at 5.00% for  at least one more meeting. A lower open may find Support at 1.9578 and 1.9496, while an open above 1.9676 should find Resistance at 1.9758 and 1.9856.  

The CD opened higher at .9849 and slid to a morning Lo of .9817 as the DX rallied on the ISM report. Higher commodity prices and a weaker DX saw the CD rebound to a morning Hi of .9879, before drifting lower towards the close to end the session at .9862, up 57 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ neutral momentum indicators. While higher commodity prices may give tempory support, direction will follow the U.S. economic outlook. The BoC may need a another 'rate-cut' to stimulate the economy, which could weigh on prices. A higher open should find Resistance at .9900 and .9930, while an open below .9848 may find Support at .9818 and .9766.

The JY opened higher at .9524 and followed most other major foreign  lower after the  ISM report to a  morning Lo of .9490, before rebounding to a daily Hi of .9572 and drifting to a close of .9566 in thin Holiday trading. The s/t trend remains 'negative' w/ weak momentum indicators. The 61.8% Fib Ret level of .9503 has held and could see lower prices if some 'stops' are triggered below. A higher open should find Resistance at .9595 and .9625, while an open below .9543 may find Support at .9513 and .9461.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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