Alaron Currency Comment

CHICAGO - Sep 29/08 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened higher at 78.14 as financial markets world-wide are under stress as more banks and financial service providers need 'bail-outs' or white-knights to take over leadership. With another U.K. bank, Bradford & Bingley  and Belgian financial giant, Fortis, along  with Wachovia being rescued by Citigroup,  traders are seeking the safe-haven of U.S. Treasuries and Gold, while supporting the DX.  Prices rose to a morning Hi of 78.255, before retracing to a morning Lo of 77.55. Weaker foreign currency markets and a drop in oil prices helped the DX rebound to a mid-day level of 78.09, before the House of Representatives vote on the bail-out bill. A 'failed'  vote on the 'bill' sent the DX to a daily Lo of 77.11, before closing the session at 77.63,up 58 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/weak momentum indicators. Until we see a  'bailout'  bill passed by  Congress, world markets will continue to be 'volatile' and more bank and financial institutions will be in jeopardy of failing. Longs need to tighten  'stops' or buy 'puts' to reduce exposure. A  lower open may find Support at 77.00 and 76.38, while an open above 77.73 should find Resistance at .78.35 and 79.08.  

The BP opened lower at 1.8360 and slid to a morning Lo of 1.7991 after Bradford & Bingley Plc, Britian's bigggest lender to landlords was taken over by Banco   Santander SA, Spain's biggest lender for 612 Million pounds ($1.1B). Prices rose to 1.8108 as the DX drifted lower on news that Citigroup purchased Wachovia Bank amid anxiety of central bankers  that  more banks may fail. As the DX recovered, the BP fell back to 1.7991 before  bouncing higher towards the close of  1.8132, down 249 tics. The close below the 9-day MA changes the s/t trend to 'negative' w/ neutral momentum indicators. Until central banks and foreign markets regain confidence in the U.S. economy to handle its problems,  pressure on prices will continue. Longs need to tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 1.7909 and 1.7686, while an open above 1.8145 should find Resistance at 1.8368 and 1.8604.    

The CD opened lower at .9631 against the DX and rose to a morning Hi at our Pivot level of .9690, before retracing to a mid-day Lo of .9615 as oil prices fell over $8.00/bbl. As the 'bail-out' vote was not passed and the DX  retraced, the CD rose to our Pivot level of .9686, before reversing  to .9636 towards the close and ending the session at .9631, down 68 tics.  The s/t trend remains 'positive' w/  firm momentum indicators. Pressure on Canada's largest trading partner and lower commodity prices could continue to weigh on prices. Longs need to tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at .9575 and .9518, while an open above .9636 should find Resistance at .9693 and .9754.

The EC opened lower at 1.4364 and rose to a morning Hi of 1.4483, before retracing to a mid-day Lo of 1.4378 as bank failures and financial markets waver over the 'uncertainty'. Prices rallied to an afternoon Hi of   1.4590 after failure of the House to pass the bill. Prices drifted lower as Congress goes back to the 'drawing-board', looking to come to terms. The EC ended the session at 1.4488, down 135 tics. The close below the 9-day MA changes the s/t trend to 'negative' w/neutral momentum indicators.  If 'long', tighten 'stops' or buy 'puts'. Keep an eye on Asian markets for further pressure that could carry over to Europe and come full-circle to Wall Street, which would lead to possibly continuation of the same. A higher open should find Resistance at 1.4646 and 1.4805, while an open below 1.4480 may find Support at 1.4321 and 1.4155.        

The JY opened 'flat' at .9503 and rose to a daily Hi of .9680 as 'risk aversion' amid falling equity markets had carry-traders covering short JY positions. Prices drifted lower into close of .9661, up 158 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/firm momentum indicators. Further weakness in equity markets should see more 'risk-aversion' and higher equtiy prices. A higher open should find Resistance at .9754 and .9847, while an open below .9587 may find Support at .9494 and .9327.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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