Alaron Currency Comment

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

The EC opened higher at 1.3176 against a weaker DX, as news that the U.S. House of Representatives passed a vote to 'lend' automakers, GM and Chrysler the $14.0B and sending equity markets higher as risk-taking outweighed risk-aversion. Comments from ECB boardmember Juergen Stark that they are reluctant to keep cutting interest rates aggressively, ahead of the next probable FOMC meeting on Dec.16th weighed on the DX, sending  the EC to a mid-day Hi of 1.3371.  Prices drifted lower as the liklihood of  the Senate passing the 'bailout' package dimmed, sending the EC  to a close of 1.3284, up 304 tics. The  s/t trend remains 'positive' w/firm momentum indicators. The sell-off in equity markets  and buying of Treasuries indicates a 'risk-aversion'  swing that may  lead to profit-taking ahead of the weekend. Longs should tighten  'stops' or buy 'puts' to  reduce exposure. A higher open should find Resistance at 1.3445 and 1.3607, while an open below 1.3208 may find  Support at 1.3046 and 1.2809.    

The   DX opened lower at 85.00 after the House of Representatives  voted yes to the $14.0B 'loan' to GM & Chrysler last night. Risk-taking  sent the DX lower as funds left the 'flight-to-quality' of Treasuries and sought higher returns in equity markets. Weaker economic data in the form  of an increase in Jobless Claims of +58K vs.exp.+20K, along with an increase in the Trade Deficit helped send the DX to a mid-day Lo of    83.99, before bouncing higher as the Senate vote looked less likely to pass the 'loan' as proposed. Prices ended the session at 84,64, down 164 tics. The s/t trend remains 'negative' w/weak momentum indicators. Late day selling of equities and buying of Treasuries supports the 'flight-to-quality' of the DX. Look for profit/risk taken off the table in major foreign currencies and short-covering in the DX. A lower open may find Support at .83.62 and .82.63, while an open above .84.98 should find  Resistance at .85.98 and 87.34.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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