Alaron Currency Comment

CHICAGO - Jun 4/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The CD opened lower at .9901 and rose to a morning Hi of .9919, before retracing to a mid-day Lo of .9847, as a stronger DX and weaker commodity prices and a potential 'rate cut' weighed on the Loonie. Prices bounced into the afternoon session, trading in a narrow range at our initial Support level of .9863 as we head towards the close.Prices ended the session at .9833 down 74 tics. The s/t trend remains 'negative' w/ weak momentum indicators.The pending 25 bp rate cut on June 10th should see traders targeting the the swing Lo at .9756 and reacting to energy/metals prices accordingly. A lower open may find Support at .9789 and .9764, while an open above .9859 should find Resistance at .9893 and .9954.

The DX opened 'flat' at 73.29, slid to a morning Lo of 73.26 and rose to a mid-day Hi of 73.54 on a better than expected Q1 Productivity report showing +2.6% v the expected +2.5%. Lower oil prices and higher equity prices helped the DX continue it recent rebound off the 71.915 Low on 5/27.Prices drifted lower towards the close and bounced to 73.49, up 20 tics. The s/t trend remains 'positive' w/ firm momentum indicators.With the Fed lending its support with a firm handly on inflation, rate cuts look to have ended and the next move looks to be higher. Anything close to the ADP Job forecast, showing an increase of +40,000 new private sector jobs would be better than the forecasted decline of - 40,000 jobs. A higher open should find Resistance at 73.60 and 73.71, while an open below 73.43 may find Support at 73.32 and 73.15.

The BP opened lower at 1.9542 and retraced to a mid-day Lo of 1.9509, after weaker than expected Consumer Confidence report showed that growth in services dropped for the first time since 2003. The weakening economy also saw the PMI services index fall below the 50 level for the first time, hitting 49.8, since March 2003. Prices rebounded off the secondary Support level/ 61.8% fib retracement level to a1.9539, before trailing lower towards the close and ending the day at 1.9533, down 99 tics.  The s/t trend remains 'negative' w/ weak momentum indicators. Further declines in Housing Prices should weigh on the BP this week. We will see further adjustment ahead of the MPC meeting results as traders will also play off the ECB results and statement by Presindent Trichet. Technicians will look for a close above the 61.8% as a signal to cover 'short' positions. A lower open may find Support at 1.9489 and 1.9444, while an open above 1.9553 should find Resistance at 1.9598 and 1.9662.

The EC opened lower a 1.5440 and rose to a morning Hi of 1.5475, ahead of stronger than expected U.S. economic data that sent prices to a morning Lo of 1.5414. Prices traded within a tight range ahead of Thursday's ECB rate meeting, where rates are expected to be 'unchanged' at 4.0%. The EC drifted lower into the close of 1.5433, down 34 tics.  The s/t trend remains 'negative' w/ weak momentum indicators. Traders will key on the ECB rate decision and the comments from ECB President Trichet for direction. A lower open may find Support at 1.5403 and 1.5374, while an open above 1.5439 should find Resistance at 1.5468 and 1.5504.

The JY opened lower at .9539 and rose to a morning Hi of .9566, before following most major foreign currencies lower against the stronger DX. Prices retraced to a morning Lo of .9488, before rebounding to a mid-day Hi of .9543. Prices consolided towards the close to end the session at .9525, down 16 tics. The s/t trend remains 'negative' w/ weak momentum indicators. While the BoJ keeps rates at 0.5% and inflation forces other central banks to keep  maintain a tightening bias, the yield gap  will still be attractive to s/t carry-traders, which should weigh on the JY. A lower open may find Support at .9484 and .9444, while an open above .9529 should find Resistance at .9569 and .9614.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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