Alaron Currency Comment

CHICAGO - Nov 13/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

Sterling opened lower at 1.4831 as pressure on the weak economy continued, sending prices to a mid-day Lo of 1.4695. The need for further rate cuts sent prices lower throughout the session, hitting a mid-afternoon Lo of 1.4551, before bouncing into the close and closing the day at 1.4672, down 274 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. Prospects for lower rates should continue to weigh on the BP as the economy struggles to recover. A lower open may find Support at 1.4488 and 1.4303, while an open above 1.4735 should find Resistance at 1.4919 and 1.5166.

The DX opened lower at 88.03 and slid to a morning Lo of 87.73 after a weaker than expected Jobless Claims showed an increase of 32K unemployed, bringing the total to a 516K, the highest level since September 2001. Continued weakness in the BP and news of Germany confiming the onset of a recession helped the DX climb to a mid-day Hi of 88.48, before sliding into the afternoon session as traders took on more 'risk' by buying equities and rotating out of the 'safe-haven' of DX. Prices slid to a daily Lo of 87.215, before ending the day at 87.38,    down 66 tics. The s/t trend remains 'positive' w/ topping momentum indicators. The topping pattern could trigger some profit/risk taken off the table, but pressure remains on most major foreign central banks to lower rates more than the Fed, suggesting traders buy the 'dips'. A lower open may find Support at 86.85 and 86.32, while an open above 87.74 should find Resistance at 88.27 and 89.16.

The CD opened higher at .8103 and rose on DX weakness to a morning Hi at our Pivot level of .8156. As the DX recovered, the CD slid to a mid-day Lo of .8025, before rising on solid gains in oil/metals to  a close of .8150, up 70 tics.The s/t trend remains 'negative' w/ neutral momentum indicators.  The lower DX and higher  oil/metals prices could see further short covering. A higher open should find Resistance at .8204 and .8257, while an open below .8114 may find Support at .8061 and .7971.  

The EC opened higher at 1.2501 and rose to a morning Hi of 1.2565 against a weaker DX. As the DX recovered on continued 'flight-to-quality' buying, the EC retraced to a mid-day Lo of 1.2431. Prices recovered to 1.2543 as we move towards the close of the session, before a late day rally sent prices to a close at our secondary Resistance level of 1.2675, up 186 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ improving momentum indicators. With Germany in a 'recession' and further rate cuts needed to stimulate the economy, the short-covering rally may present an opportunity to re-establish 'short' positions. A higher open should find Resistance at 1.2799 and 1.2922, while an open below 1.2585 may find Support at 1.2462 and 1.2248.

The JY opened lower at 1.0425 and slid to a morning Lo of 1.0380, before rising to a mid-day Hi of 1.0579. Prices retraced to 1.0327 as equity markets received a 'short-covering' boost from 'undervalued' energy companies as news of an OPEC emergency meeting sent oil prices higher. Prices bounced to a close of 1.0376 to end the day down 96 tics. The s/t trend remains 'positive' w/neutral momentum indicators.  A  continuation of the U.S. equity rally  should entice carry-traders to take on 'risk' and  short JY to buy higher yielding foreign currencies. A lower open may find Support at 1.0276 and 1.0175, while an open above 1.0427 should find Resistance at 1.0528 and 1.0679.    

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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