Alaron Currency Comment

CHICAGO - May 22/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The BP opened higher at 1.9805 against a weaker Dollar, higher oil prices and inflation concerns that should keep rates 'unchanged' at the June 4-5 MPC meeting. A  less than expected decline in Retail Sales helped prices bounce to 1.9820, before a DX bounce on the better than expected Jobless Claims sent the BP lower. Prices slid to a morning Lo of 1.9748, before bouncing into the afternoon session. As the DX rose, the BP retraced to a daily Lo of 1.9744, before closing the session at 1.9749, up 100 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Traders will key off the  DX reaction to Existing Home Sales, before leaving  for the Holiday weekend. Longs should tighten 'stops' or buy 'puts'  to reduce exposure. A higher open should find Resistance at 1.9828 and 1.9908, while an open below 1.9739 may find Support at 1.9659 and 1.9570.  

The DX opened higher at 72.10 and slid to 72.05, before a decline in Jobless Claims sent prices up to our Pivot level of 72.22. Traders will key on energy prices and Friday's Existing Home Sales ahead of a Holiday weekend. Prices rose to a mid-day Hi of 72.37, before trailing lower into the afternoon session. Prices bounced to a Daily Hi of 72.41, before closing at 72.40, up 32 tics. The s/t trend remains 'negative' w/ weak momentum indicators. The close above the 61.8%  Fib level may attract technicians, but a negative Existing Home Sales report could weigh on prices. Shorts may take profit-risk off the table ahead of the  long Holiday weekend. A higher open should find Resistance at 72.56 and 72.72, while an open below 72.25 may find   Support at 72.08 and 71.76.    

The CD opened higher at 1.0160, but retraced on a weaker Retail Sales report to a 1.0121 and a bounce in the DX. Prices rebounded to our opening level, before profit-taking in the energ/metals and the rising DX sent prices back to our Pivot level of 1.0134 as we begin afternoon trading. Prices continued to trade on either side of our Pivot level of 1.0134, before closing at 1.0142, down 9 tics. The s/t trend remains 'positive' w/ expensive momentum indicators. Direction of oil/metals should dictate s/t direction. Longs need to tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 1.0118 and 1.0094, while an open above 1.0145 should find Resistance at 1.0169 and 1.0196.

The EC opened lower at 1.5738 after a weaker than expected New Industrial Orders report and slid to 1.5708 against a stronger BP and firmer DX. Prices bounced to a morning Hi of 1.5743, before retracing to a morning Lo of 1.5680 against the firmer DX. The firmer DX continued to press the EC lower into the close of 1.5681, down 78 tics. The s/t trend remains 'positive' w/ expensive momentum indicators. Hawkish tones continue to support the possibility of a rate hike, which could see traders buying the 'dips'. Longs should still tighten 'stops' or buy 'puts' to reduce exposure ahead of the Holiday weekend. A lower open may find Support at 1.5639 and 1.5596, while an open above 1.5717 should find Resistance at 1.5760 and 1.5838.

The JY opened lower at .9701 and retraced to .9647 against a stronger BP and firmer DX. Pressure from a stronger DX sent the JY to a morning Lo of .9617 and traded in a thin range as we begin the afternoon session. Traders took profit/risk off the table towards the close, sending prices to a daily LO of .9589 and closing at .9592, dow 119 tics. The close below the 9-day MA changes the s/t trend to 'negative' w/ neutral momentum indicators. Traders will key off the DX and the Home Sales report. A lower open may find Support at .9539 and .9487, while an open above .9642 should find Resistance at .9694 and .9797.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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