Alaron Currency Comment

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

The DX opened 'flat' at 78.165 and slid to a morning Lo of 78.07 after a higher than expected Jobless Claims report showing an increase of 15K vs the expected decrease of -1K. An increase in the ISM Non-Mfg. Index to 50.6 moved prices higher at a time when ECB President Trichet's 'hawkish' comments on inflation and weaker economic outlook sent the EC lower. Prices rose to a morning Hi of 78.795, before drifting lower into the afternoon session. Prices moved higher into the close and ended the session at 78.66, up 49 tics. The s/t trend remains 'positive' w/ over-bot momentum indicators. Traders will key on the Payroll Report at 8:30 am et, expected to show a loss of -40K  to -75k jobs. The  independent report by ADP showed a loss of  -33K private sector jobs. Longs should tighten 'stops' or buy 'puts' to reduce exposure.A  higher open should find Resistance of 79.00 and 79.34, while an open below 78.45 may find Support at 78.11  and 77.57.  

The BP opened higher at 1.7801 and rose to a morning Hi at our initial Resistance level of 1.7824 after the BoE left s/t interest rates 'unchanged' at 5.0% to contain higher inflation risks.  A stronger DX sent prices to a morning Lo of 1.7613, before bouncing to an afternoon Hi of 1.7728 as the DX  retraced. A bounce in the DX sent the BP lower into the close of 1.7673, down 67 tics. The s/t trend remains 'negative' w/over-sold momentum indicators. Traders  will key on the Payroll Report, which could lead to some profit/risk taken off the table on DX weakness.  A lower open may find Support at 1.7575 and 1.7477, while an open above 1.7711 should find Resistance at 1.7809 and 1.7945.      

The CD opened higher at .9432 and rose to a morning HI of .9454, before the rising DX and lower oil sent prices to a mid-day Lo of .9371. As the DX drifted lower and oil prices bounced higher, the CD climbed above our Pivot level of .9384 to an afternoon Hi of .9412. Prices  drifted lower into the close and ended the session at .9369, down 53 tics.  The s/t trend remains 'negative' w/ weak momentum indicators. The higher DX and lower oil/metals continue to weigh on prices. Key on the Payroll Report for DX direction. Lower DX - Higher Foreign Currencies. A  lower open may find Support at .9320 and .9270, while an open above .9401  should find Resistance at .9451 and .9532.

The EC opened lower at 1.4474 and rose to a morning Hi of 1.4498 as the DX slid lower and ECB President Trichet's 'hawkish' comments on containing inflation helped maintain the 'bid'. Comments from Luxembourg Finance Minister Jean-Claude Juncker stating that the currency is 'over-valued' weighed on prices as the DX rebounded on better economic data and Trichet acknowledged the economic 'slowdown'. Prices retraced to a morning LO of 1.4317. Prices bounced into the afternoon session as traders took profit/risk off the table ahead of the Friday's U.S. Payroll  Report. The EC ended the session at 1.4317, down 167 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. While traders look for  the trend to continue, a weaker than expected Payroll Report (-70K) could see a short-covering rally. Shorts should tighten 'stops' or buy 'puts' to reduce exposure.    

The   JY opened lower at .9244 and slid to a morning Lo if .9232, before rising to a daily hig of .9353. The falling equity prices saw carry-traders covering 'short' yen  positions as 'risk-aversion' took  precedent, ahead of the Asian  market open. Prices ended the day at .9350, up 102 tics.  The s/t trend remains 'positive' w/ firm momentum indicators. Shorts will continue to cover their carry-trades until equity markets turn 'positive' and risk tolerance resumes. A higher open should find Resistance at .9397 and .9445, while an open below .9306 may find Support at .9258 and .9167.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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