Alaron Currency Comment

CHICAGO - Jan 12/09 - SNS -- Following is the currency futures comment from Alaron Trading Corp.

The BP opened lower at 1.4950 after a weak Confederation of British Industry report showed as many as 15,000  jobs lost in the financial-services industry and a continued plunge in business confidence.  Prices slid to a mid-day Lo of 1.4788 and continued under pressure from a stronger DX through to a close of 1.4822, down 287 tics.  The s/t trend remains 'positive' w/neutral momentum indicators.  Continued weakness suggests even more severe slowing ahead  and a test of the 61.8% Fib Ret level of 1.4726. A lower open may find Support at 1.4697 and 1.4571, while an open above 1.4913 should find Resistance at 1.5039 and 1.5255.

The DX opened higher at 83.66 as risk-aversion in global equity markets and a probable rate cut on Thursday from the ECB sent prices to a morning Hi of 84.19, before sliding into the afternoon session. Prices bounced higher towards the close and ended the 'day' session at 83.795, up 34 tics.The s/t trend remains 'positive' w/ firm momentum indicators. With a 'huge' stimulus package waiting in the wings and increase concerns of further weakening in the U.K. and EZ, the safe-haven play should continue and test the recent Hi of 84.98 on Jan.6th. Longs should tighten 'stops' or buy 'puts' ahead of this week's economic data, which could weigh on prices. A higher open should find Resistance at 84.20 and 84.60, while an open below 83.78 may find Support at 83.37 and 82.95.

The EC opened lower at 1.3375 as safe-haven buying of the DX and a probable 50bp - 75bp rate cut from the ECB on Thursday, Jan.15th,  weighed on prices. The EC slid to a morning Lo of 1.3256, before bouncing to a mid-day level of 1.3401. Comments from IMF Managing Director Dominique Strauss-Kahn, stating that governments in Western Europe are "underestimating the needs" to stimulate the EZ also weighed on prices as they drifted lower towards the close of 1.3365, down 35 tics. The s/t trend remains 'negative' w/weak momentum indicators. A bounce off the 61.8% Fib Ret level may  be short lived as the ECB considers how much  of a rate cut will be needed   ahead of Thurday's meeting. We could see 'stops' hit  below the 1.3250 level. A  higher open should find Resistance at 1.3458 and 1.3551, while an open below 1.3357 may find Support at 1.3264 and 1.3163.  

Bob Kozak

Alaron Research Team

800.462.4691

bkozak.com

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