Alaron Currency Comment

CHICAGO - Apr 17/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

Sterling opened higher at 1.9718 and dipped to a morning Lo of 1.9710, before climbing to a morning Hi of 1.9850, after ECB member Jean-Claude Juncker expressed his and the Euro Group's displeasure with the rapid rise of the Euro after the recent G-7 conference. Stating that the weaker Dollar is not in the best interest of the global economy, his 'jawboning' sent a message that the Euro should 'ease' to make exports more favorable. Traders sold the EC and bid the BP higher, before trailing lower into the afternoon session. Prices bounced higher on concerns that the Libor Rate may have been 'understated', which could equate to an 'upside' adjustment to rates, increasing the yield for traders. The close above the 9-day MA changes the s/t trend to 'positive' w/ 'firm' momentum indicators.Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.9921 and 2.0005, while an open below 1.9766 may find Support at 1.9682 and 1.9527.    

The DX opened higher at 71.97 and slid to a morning Lo of 71.69 against a stronger BP.A weaker than expected  Philly Fed Mfg. Index weighed on prices, which managed to hold on to marginal gains as enthusiam from  Wednesday's equity gains  and a lower EC increases  optimism  and lowers the odds of  the need for a 50bp rate cut on April 30th. Prices recovered off the mid-day low and closed the session at  71.92 , up 27 tics.  The s/t trend remains 'negative' w/ 'weak' momentum indictors. Another rate cut  should weigh on prices and test the   Target Lo of 71.20 on  March 17th. A higher open should find Resistance at 72.12 and 72.32, while an open below 71.84 may find Support at 71.64 and 71.36.      

The CD opened lower at .9950 and retraced to a mid-day Lo of .9855 after a lower than expected CPI report set the tone  for a possible 50bp rate cut  at the April 22nd rate meeting. Prices bounced higher into the aftenoon session on the Dollar  increase, before trailing lower towards the close  as weaker commodity prices weighed on the CD. Prices ended the day at .9870, down 107 tics.  The s/t trend remain 'positive' w/ 'neutral' momentum indicators. Look for further profit-taking ahead of the April 22nd rate meeting. Longs should tighten 'stops' or buy 'puts'.  A lower open may find Support at .9801 and .9731, while an open above .9920 should find Resistance at .9990 and  1.0109.    

The EC opened lower at 1.5844 after ECB council member Jean-Claude Juncker stated that the Euro's advance against the Dollar wasn't "desirable". Carry-traders reacted by rotating into the higher yielding BP and took profit after the current run-up to a contract high in the EC. Prices recovered to a morning Hi of 1.5903 on weaker than expected U.S. economic data, before trailing lower into the afternoon session to a daily Lo of 1.5835, before bouncing to a close of 1.5849, down 64 tics. The s/t trend remains 'positive' w/ 'strong' to 'over-bot' momentum indicators. A lower open may find Support at 1.5789 and 1.5728, while an open above 1.5867 should find Resistance at 1.5928 and 1.6006.  

The JY opened lower at .9795 as carry-traders took advantage of higher equity prices in the Nikkei and shorted Yen to purchase higher-yielding major foreign currencies. As equity prices eased in Europe and the U.S., traders took profit/risk off the table and covered JY shorts, sending prices to a morning Hi of .9852, before trailing lower into the afternoon session amd ending the session at .9792, down 74 tics.    The close below the 9-day MA changes the s/t trend to 'negative' w/ 'weak'momentum indicators. Further weakness in equity prices in Japan could see carry-traders taking profit/risk off the table and covering JY shorts, pushing prices higher. A lower open may find Support at .9751 and .9711, while an open above .9810 should find Resistance at .9850 and .9909.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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