Alaron Currency Comment

CHICAGO - Aug 21/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX index opened lower at 76.63 and rose to a morning HI of 76.73, before concerns over the financial sector and energy market saw traders selling stocks in Asia and Europe and covering JY 'short-positions', sending the DX lower. Prices slid to a daily Lo of 76.175 as  'longs' took  profit/risk off the table, before bouncing into the afternoon session.  The DX botttomed out and added a few ticks heading towards a close of 76.315, down 78 tics. The close below the 9-day MA changes the s/t trend to 'negative' w/ turning momentum indicators. Traders will continue to monitor oil and financial concerns ahead of  Friday's comments from Fed Chrm. Bernanke. A lower open may find Support at 75.98 and 75.65, while an open above 76.50 should find Resistance at 76.83 and 77.35.

The BP opened higher at 1.8635 and slid to a mornng Lo of 1.8605, before rebounding on the DX sell-off to a morning Hi of 1.8753 and sliding to our secondary Resistance level of 1.8722 as we enter the afternoon session. Prices ended the session at 1.8721, up 142 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ weak momentum indicators. We will see if the short-covering continues as traders will key on the DX for direction. A higher open should find Resistance at 1.8791 and 1.8861, while an open below 1.8683 may find Support at 1.8613 and 1.8505.

The CD opened higher at .9495 and slid to a morning Lo of .9471, before climbing to a morning Hi of .9577 on DX weakness and higher oil/metals prices. The increase in the CPI may be enough to keep thoughts of a rate cut on the back burner through year-end. Prices continued trading in a narrow range through to the close of .9561, up 152 tics. Watch the oil/metals complex to see if funds continue to add to positions, which would support higher prices. A higher open should find Resistance at .9617 and .9674, while an open below .9521 may find Support at .9464 and .9368.

The EC opened higher at 1.4796 and dipped to a morning Lo of 1.4764, before following most other major foreign currency markets higher on DX weakness. Prices rose  to a morning Hi of 1.4880 as energy prices rose   and traders took profit/risk out of the DX. The EC slid into the afternoon session and traded along our secondary Resistance level of 1.4853 through to the close of 1.4857, up 139 tics.  The close above the 9-day MA changes the s/t trend to 'positive' w/ weak momentum indicators.  If  fundamentals have not changed 'dramically', traders should re-establish 'short' positions at higher prices. With a weaker economic forecast through the end of the year, selling the 'rallies', once it has completed, should be beneficial. We shall see. A higher open should find Resistance at 1.4920 and 1.4983, while an open below 1.4817 may find Support at 1.4754 and 1.4651.  

The JY opened higher at .9255 as risk-averse carry-traders take profit/ risk off the table as equity prices retraced after further concerns over more write-downs in the financial sector will weigh on prices. After dipping to a mornng Lo of .9213, prices continued to a morning Hi of .9259, before sliding lower during afternoon trading. Prices drifted to a close of .9218, up 99 tics. The s/t trend remains 'positive' w/ turning momentum indicators. Further weakness in the equities could lead to more short-covering and higher prices. This may be enough to continue through the European open and weaken the DX. If oil prices continue climbing, we could see further DX weakness, benefitting most major foreign currency markets. A higher open should find Resistance at .9280 and .9341, while an open below .9197 may find Support at .9136 and .9053.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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