Alaron Currency Comment

CHICAGO - Jul 31/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened lower at 73.41 and slid to a morning Lo of 73.015 on a lower than expected Q2 GDP of +1.9% and an increase in the Jobless Claims of +44K, greater than the expected decrease of -5,000. As the energy markets retraced on the weaker economic data, the DX rebounded to a mid-day Hi at our Pivot level of 73.51, before drifting lower into the afternoon session. The  DX slid to a close of 73.42, down 9 tics.  The s/t trend remains 'positive' w/   firm momentum indicators.Traders will key on Friday's Payroll Report for direction. A higher open should find Resistance at 73.61 and 73.81, while an open below 73.31 may find Support at 73.12 and 72.82.

The BP opened lower at 1.9722 and slid to a morning Lo of 1.9717 after Consumer Confidence slid to a record low of -39 in July and Home Prices slid -8.1% y/y. Weak economic U.S. data sent the BP to a morning Hi of 1.9865, before a fall in energy prices helped the DX rebound and BP retrace to a mid-day Pivot level of 1.9730. The BP bounced higher towards the close and ended the session at 1.9763, up 20 tics. The s/t trend remains 'negative' w/neutral momentum indicators. Despite the slowing economy, the attractive yield of 5.0% remains attractive  as traders take direction from the DX. A lower open may find Support at 1.9698 and 1.9634, while an open above 1.9782 should find Resistance at 1.9846 and 1.9930.

The CD opened higher at .9763 and slid to a morning LO of .9720 after a weaker than expected July GDP, showing a decrease of -0.1% vs the expected +0.2%. Prices rebounded on the DX sell-off, sending prices to a morning Hi of .9774, before falling to .9738 as we enter the afternoon session. The CD rebounded during the afternoon to .9772, before ending the day at .9764, up 2 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Lower oil prices continue to weigh on the CD as export revenue slows along with the global market economy. Key on the DX after Payroll Report for direction. A higher open should find Resistance at .9793 and .9820, while an open below .9756 may find Support at .9729 and .9692.

The EC opened higher at 1.5578 after the July CPI showed the largest monthly jump of +4.1% since 1992. The inflationary data will likely pressure the ECB to consider another rate increase based on their 'hawkish' attitude towards inflation. Prices slid to a 1.5564, before bouncing to a morning Hi of 1.5665. A DX rebound sent prices to a mid-day Lo of 1.5537, before bouncing into the afternoon session. Prices rose into the close to end the session at 1.5557, up 24 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A combination of a weaker DX and 'hawkish' comments from the ECB could see  some short-covering and possibly spec interest at the  61.8%  Fib Ret. level of 1.5521. A lower open mayf ind Support at 1.5506 and 1.5454, while an open above 1.5585 should find Resistance at 1.5637 and 1.5716.  

The JY opened lower at .9261 and slid to a morning Lo at our initial Support level of .9247, before rebounding to a morning Hi of .9319 . Prices retraced to a mid-day Lo of .9266, before bouncing into the afternoon session.  The JY bounced higher into the close and ended the session at .9292, up 20 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A weak Payroll Report could spark a short-covering  rally  off the dble-btm low. A higher open should find Resistance at .9325 and .9357, while an open below .9286 may find Support at .9254 and .9215.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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