Alaron Currency Comment

CHICAGO - Jan 7/09 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The DX opened lower at 83.18 against most major foreign currency markets after weak data on Mortgage Applications (- 8.2%) and the private sector ADP Employment Survey showing a loss of 693,000 jobs. Prices retraced to our secondary Support level of 82.47, before bouncing towards the close of 83.135, down 58.5 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Minutes from the last FOMC meeting set a cautious tone for the economy and as we look to Friday's Payroll Report of a potential loss of another 500,000 jobs, prices could seek lower levels. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 82.37 and 81.60, while an open above 83.23 should find Resistance at 83.99 and 84.23.  

The EC opened higher at 1.3592 and rose to a morning Hi of 1.3717 as the DX retraced on weak economic data. Prices retraced to a morning Lo of 1.3568, before bouncing into the afternoon session. The EC drifted lower towards the close to end the session at 1.3583, up 91 tics. The s/t trend remains 'negative' w/ neutral momentum indicators. Weaker inflation data has opened the door for a possible 50bp rate cut at the Jan. 15th ECB rate meeting to 2.00%, which could see prices test the 61.8 Fib Ret. level of 1.3250. Traders will key on the U.S. Payroll Report Friday, which could boost prices. A higher open should find Resistance at 1.3733 and 1.3883, while an open below 1.3567 may find Support at 1.3417 and 1.3251.

The JY opened higher at 1.0791 and rose to a morning Hi of 1.0828 against the weaker DX and lower equity prices. Carry traders covered short positions and supported prices above our initial Resistance level of 1.0761, before ending the session at 1.0792, up 147 tics. The s/t trend remains 'negative' w/ neutral momentum indicators. Continued weakness in equity prices should see more 'risk-aversion' by carry traders, supporting higher JY. A higher open should find Resistance at 1.0879 and 1.0966, while an open below 1.0752 may find Support at 1.0665 and 1.0538.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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