Alaron Currency Comment

CHICAGO - Aug 18/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened lower at 77.19 as traders take profit/risk off the table ahead of  anticipated weak Housing data Tuesday. The recent climb in the DX may have  been too Hi and too Fast to be 'sustained' for some traders not to take a little off the top  and tighten 'stops'. Weak economic data will likely outweigh  an increase in the PPI as the  chance of a rate increase shows  only a 20% of a rate hike at the September 16 th FOMC meeting. Prices slid to a morning Lo of 77.10, before bouncing to a morning Hi of 77.27.  A lack of buying interest above the Pivot of 77.24, sent the DX to 77.01 as we enter the afternoon session. Prices recovered through the afternoon, hitting a daily Hi of 77.28 and closing at the same level, down 7 tics.  The s/t trend remains 'positive'w/ over-bot momentum indicators. The late afternoon recovery could take some of the edge off Tuesday's Housing Data, which traders will key on along w/ the PPI, before adjusting positions after the 8:30 am et announcement. A higher open should find Resistance at 77.39 and 77.51, while an open below 77.16 may find Support at 77.04 and 76.81.

The BP opened higher at 1.8620 against the sliding DX and rose to a morning Hi of 1.8644, before drifting to a morning Lo of 1.8595.  Prices bounced into the afternoon session and hit a daily Hi of 1.8655, before retracing on DX strength to a close of 1.8602, up 16 tics. The s/t trend remains 'negative' w/  over-sold momentum indicators. The dismal Home Prices data  continues to  weigh on the economy and will need help from  a weaker DX or bounce in economic data to spark a short-covering rally. A lower open may find  Support at 1..8559 and 1.8515, while an open above 1.8621 should find Resistance at 1.8665 and 1.8727.  

The CD opened higher at .9453 against the lower DX, but soon retraced along with oil prices to a morning Lo at our Pivot level of .9403, before bouncing into the afternoon session at .9430. As the DX rebounded, the CD  retraced towards the close, posting a daily Lo of .9389, before close the session at .9391, down 43 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. The CD may get some help from a lower DX and a bounce in commodity prices, outside of oil prices. A lower open may find Support at .9360 and .9330, while an open above .9420 should find Resistance at .9450 and .9510.  

The EC opened higher at 1.4691 and rose to a morning Hi of 1.4706 as the DX weakened. Prices retraced to a morning Lo of 1.4668 before bouncing to a daily Hi of 1.4725 as we enter the afternoon session. A late afternoon recovery in the DX saw the EC retrace to 1.4673 before ending the day at 1.4675, up 20 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. Unless lower oil prices and a higher DX can  help exporters increase  revenues, the economic slowdown will continue to  weigh on the EC until the ECB can focus on fiscal stimulus and lower rates. A lower open may find Support at 1.4616 and 1.4556, while an open above 1.4681 should find Resistance at 1.4741 and 1.4806.      

The JY opened higher at .9087 and slid to a morning Lo of .9075, before climbing to a mid-day Hi of .9097 as we begin the afternoon session. Prices rose to a daily Hi of .9110, before selling off towards the close to end the day at   .9090, up 28 tics. The s/t trend remains 'negative' w/ weak momentum indicators. The  economic slow-down will probably require a  rate-cut by the BoJ by year end, but not a Tuesday's BoJ rate meeting, where rates will be probably remain 'unchanged' at 0.5%. A higher open should find Resistance at .9114 and .9137, while an open below .9086 may find Support at .9063  and .9035.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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