Alaron Currency Comment

CHICAGO - Aug 7/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The EC opened higher at 1.5441 and rose to a  morning Hi of 1.5474 after the ECB left rates 'unchanged' at 4.25% and ECB President Trichet stressed keeping inflation under wraps after a 4.1% increase in July. His 'hawkish' stance lost its edge after he acknowledged that second-half growth will slow and he has no bias or pre-commitment to future rate hikes. The 'dovish' tone sent traders towards the 'sell' window as prices retraced to a mid-day Lo at our secondary Support level of 1.5285. Prices continued to trade at this level through to the close of 1.5294, down 90 tics.The s/t trend remains 'negative' w/ weak momentum indicators. With the 'hawks' wings clipped, traders will eye the Target Lo of 5/8 at 1/5207 as an area where 'shorts' may start to cover. A lower open may find Support at 1.5225 and 1.5155, while an open above 1.5349 should find Resistance at 1.5419 and 1.5543.

The DX opened lower at 74.16 and slid to a morning Lo at our initial Support level of 74.03 against a stonger EC. Prices rebounded after ECB President Trichet stated that the slowing EZ economy would reduce expectations of any further rate increases this year. Prices rose to a mid-day Hi at our secondary Resistance level of 74.80, before drifting lower as we enter the afternoon session. A better than expected Pending Home Sales Index of +5.3 vs the expected -1.0% helped support the move. Prices drifted lower towards the close to end the day at 74.70, up 29 tics. The s/t trend remains 'positive' w/ over-bot momentum indicators. As long as lower oil prices continue to aid equity prices, the DX should be well supported against most other major foreign currency markets. Further 'strain' on the financial sector could see some profit/risk taken off the top as news of problems in the Alt-A Pay Option ARM's could see another shoe drop for Investment Banks and Thrifts. A higher open should find Resistance at 74.99 and 75.28, while an open below 74.51may find Support at 74.21 and 73.73.

Sterling opened higher at 1.9465 and rose to a morning Hi of 1.9486 after the BoE left rates 'unchanged' at 5.0% and the DX retraced on an increase in Jobless Claims. A turn-around in the EC on slowing growth expectations, similar to the U.K., sent the DX higher and BP down to a morning Lo at our initial Support level of 1.9366 as we head into the afternoon session. Prices moved along the Support level through to the close and ended the session at 1.9383, down 36 tics. The s/t trend remains 'negative' w/weak-oversold momentum indicators.  As long as 'shorts'  remain patient, prices could test the  'swing-low' of 1.9276 on 6/13. A lower open may find Support at 1.9337 and 1.9292, while an open above 1.9412 should find Resistance at 1.9457 and 1.9532.

The CD opened lower at .9534 and rose to a morning Hi at our Pivot level of.9557 on DX weakness, before following most other major foreign currencies lower to a mid-day Lo of .9491 as the DX strengthened. Prices rose to our initial Support level of .9504 and ended the session at .9503, down 37 tics. The s/t trend remains 'negative' w/ oversold momentum indicators. Further weakness or problems in the 'Financials' could see safe-haven buying  in  the Gold/Silver, but would need help in the oil sector to cushion  further selling. A lower open may find Support at .9474 and .9445, while an open above .9520 should find Resistance at .9549 and .9595.  

The JY opened higher at .9159 against a weaker DX  and rose to a morning Hi of .9183, before a stronger DX sent prices to a morning Lo of .9135. Lower equity prices have kept 'carry-traders' on the sidelines as they take some profit and move the JY higher to .9164 as we begin the afternoon session.  Prices slid to an afternoon Lo of .9141 and bounced into the close of .9157, up 10 tics. Lower equity prices should see some carry-traders taking profit/risk off the table ahead of the weekend, proping the JY off the Lo. A lower open may find Support at .9134 and .9110, while an open above .9158 should find Resistance at .9182 and .9206.

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.