Alaron Currency Comment

CHICAGO - Dec 3/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The BP opened lower at 1.4755 and slid to a morning Lo of 1.4693 after a weaker than expected service sector report fromt the Chartered Institute of Purchasing and Supply (CIPS) showing the index fell to 40.1, the lowest since the report began in 1996. The weakening economy will give reason for the MPC to lower rates Thursday from 50bps - 100bps from the current 3.00% level. Prices bounced to a morning Hi of 1.4827 as  the DX retraced after weaker than expected  ISM Non-Mfg. report. Prices trailed lower into the close and ended the session at 1.4726, dow 152 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Continued concern over the 'recessionary' environment and lower interest rates could see a test of the Target Low of 1.4551 on 11/13. A lower open may find Support at 1.4615 and 1.4503, while an open above 1.4774 should find Resistance at 1.4886 and 1.5045.

The DX opened higher at 87.32 against most major foreign currencies as 'risk aversion' saw tarders seek the safe haven and liquidity of the Greenback. Prices rose  to our initial Resistance level of 87.38, before sliding to our Pivot level of 86.915 after a weaker than expected ISM Non-Mfg. Index report and ADP National Employment private sector  report showed 250,000 more jobs  lost in November. Prices bounced into the afternoon session as traders awaited the Beige Book report, which  confirmed weakness throughout the 12 Fed Districts. Much of the weakness was discounted by the market as prices were quiet into the close of 87.18, up 36 tics.  The s/t trend remains 'positive' w/neutral momentum indicators. Traders will look ahead to Friday's Payroll Report, which some economists estimate could show losses  of up to 450,000 jobs and an increase in the employment rate to 6.8%. Any increase in prices Thursday should be hedged going into Friday's report.  A higher open should find Resistance at 87.61 and 87.91, while an open below 87.13 may find Support at 86.84 and 86.36.

The EC opened lower at 1.2616 and slid to a morning Lo of 1.2597 against the weaker DX, as traders sought the safe-haven of the DX as weakness throughout the EZ ahead of Thursday's ECB rate meeting could see rate cuts from 50bps - 100bps, which would weigh on the EC. Prices bounced to a morning Hi of 1.2689 as the DX retreated after a weaker than expected ISM- Non Mfg Index report and a higher expectation for job losses  in the  private sector by ADP. Prices traded lower heading into the afternoon session, before testing our Pivot level of 1.2671 as we headed into the close, ending the session at 1.2550, down 46 tics. The s/t trend remains 'negative' w/ neutal momentum indicators. Traders will await ECB President Trichet's comments after the rate decision to access the direction  and timing of future cuts. A lower open may find Support at 1.2632 and 1.2613, while an open above 1.2658 should find  Resistance at 1.2677 and 1.2703.    

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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