Alaron Currency Comment

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

The EC opened higher at 1.5813 against a weaker DX and comments from Market News Int'l, stating that a number of   'central bankers' believe the ECB will raise rates, should inflation continue to escalate. Prices slid to 1.5785, before bouncing to a mid-day HI of 1.5836 and drifting lower as we begin the afternoon session. Higher oil prices and lower equity prices helped the EC rise to a daily Hi of 1.5864, before ending the session at 1.5847, up 51 tics. The s/t trend remains 'positive' w/ neutral momentum indicators. A higher open should find Resistance at 1.5880 and 1.5912, while an open below 1.5831 may find Support at 1.5799 and 1.5750.  

The DX opened lower at 72.36 and rose to a morning Hi of 72.48 on better than expected earning results from Bank of America, which sparked higher equity prices early in the session. Prices  topped out when equity prices retraced on higher oil, sending the DX to a mid-day Lo of 72.27, before bouncing into the afternoon session. The DX followed equity prices lower into the close and ended the session at 72.215, down 21 tics. The s/t trend remains 'negative' w/ neutral momentum indicators. The Fed may have a difficult time raising rates, unless the economy strengthens and housing sectors firms, while talk of raising rates in the EC could weigh on the DX. A lower open may find Support at 72.12 and 72.02, while an open above 72.30 should find Resistance at 72.40 and 72.57.  

The BP opened lower at 1.9874, after a Housing report showed prices of homes fell an annual 2%, down 1.8% for the month. Prices slid to a morning Lo of 1.9852, before rebounding to a mid-day Hi of 1.9904 on DX weakness. The BP rose to a daily Hi of 1.9910, before ending the day at 1.9904, up 8 tics. The s/t trend remains 'positive' w/ firm momentum indicators. While the economy continues to be pressured by a weak housing sector, the BoE looks to keep rates 'unchanged' rather than lower rates to support consumers. Will the slowing economy continue to pressure the MPC to relinquish its hold on rate increases before the economy can recover? Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.9934 and 1.9963, while an open below 1.9878 may find Support at 1.9849 and 1.9793.

The CD opened higher at .9958 and slid to a morning Lo of .9836, before rebounding on DX weakness and higher oil/metals prices to a mid-day Hi at our secondary Resistance level of .9983.  The CD topped out at the daily Hi of .9984 and ended the session at .9982, up 52 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Higher oil/metals prices continue to attract buyers/hedgers and act as a buffer. A higher open should find Resistance at 1.0004 and 1.0027, while an open below .9962 may find Support at .9939 and .9897.

The JY opened lower at .9371 and slid to a morning Lo of .9364, before rebounding to a mid-day Hi of .9401 as the DX and U.S. equity markets retraced. Prices slid to .9381 before bouncing towards the close and ending the session at .9398, up 14 tics.  The s/t trend remains 'negative' w/ weak momentum indicators. A higher open should find Resistance at .9433 and .9468, while an open below .9397  may find Support at .9362 and .9326.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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