Alaron Currency Comment

CHICAGO - Aug 11/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened lower at 75.98, slid to a morning Lo of 75.91 and rose to a mid-day Hi of 76.55 as equity prices rose  on lower Oil prices and  weakness in the Euro Zone and U.K  has not found a bottom. As oil prices found a daily support level, the DX drifted lower into the close and ended the session at 76.315, up 30.5 tics.  The s/t trend remains 'positive' w/  over-bot momentum indicators. Longs should tighten 'stops' or buy 'puts' to reduce exposure. As long as global economies continue to perceive continued weakness, the U.S. may  to attract foreign funds. A higher open  should find Resistance at 76.67 and 77.04, while an open below   76.18 may find  Support at 75.82 and 75.33.  

The BP opened higher at 1.9147, before retracing to a mid-day Lo of 1.9017 against the stronger DX. Prices bounced into the close to end the session at 1.9072, down 74 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. The BoE believes that inflation must be contained before economic stimulus can try to revive a weak economy. Can they be accommodative enough to keep the economy breathing before CPR can't revive the patient? We shall see.  Shorts should tighten 'stops' or buy 'calls' to reduce exposure, as any profit-taking in the DX could see a short-covering bounce in the Sterling. A lower open may find Support at 1.8991 and 1.8909, while an open   above 1.9098 should find Resistance at 1.9180 and 1.9287.

The CD opened higher at .9375 and jumped to a morning Hi of .9389, before a weaker than expected report showing Housing Starts dropped 14% from July and oil/metals  prices continued  their decline, sent prices to a mid-day Lo of .9327. As oil prices  bounced off morning Lo's, the CD followed, as some shorts covered heading into the close of .9347,  down 10 tics.  The s/t trend remains 'negative'w/ over-sold momentum indicators. The liquidation in commodities by funds continue to weigh heaviliy on prices, while a slowing U.S. economy adds additional pressure on export revenues. The BoC may signal a need to stimulate the economy w/ a rate cut, that could weigh further on prices. A lower open may find Support at .9316 and .9276, while an open above .9367 should find Resistance at .9407 and .9458.

The EC opened higher at 1.4984 and rose to a morning Hi of 1.4993, before weaker oil prices and stronger DX  sent prices to a mid-day Lo of 1.4853. Prices bounced towards the close as oil prices found temporary Support at a 3-month Lo at 112.72 and closed above 114.00, as the EC ended the session at 1.4901, down 81 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. Traders are looking for a short-covering rally above the 61.8%   Fib Ret. level of 1.4930, which could start on any DX profit-taking or weaker economic data. A lower open may find Support at 1.4817 and 1.4733, while an open above 1.4937 should find Resistance at 1.5021 and 1.5141.

The JY opened higher at .9125 and rose to a morning Hi at our initial Resistance level of .9147, before continued strength from the DX sent prices to a daily Lo of .9075. Prices bounced into the close as oil prices bounced higher, weakening the DX and pushing the JY to a close of .9108, up 18 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. With weak economic expectations and talk of a possible recession, the only positive is the lack of carry-trade activity. A lower open may find Support at .9073 and .9038, while an open above .9110 should find Resistance at .9145 and .9182.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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