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The Currency Futures Report

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Dollar Gives Back Early Gains, Despite Gov't Support

Tue, Jul 15 2008, 12:45 GMT
by Bob Kozak

Alaron

Dollar Index (DXU8):

The DX opened higher at 72.48 and rose to a morning Hi of 72.53 after Sec.Treasury Paulson reassured financial markets that the two largest private mortgage lenders, FNMA and FHLMC would receive help from the U.S. Treasury Dept. Prices retraced to a morning Lo of 72.215, as we head into the afternoon session. The DX posted a daily Lo of 72.11 and bounced into the close of 72.165, down 18 tics. The s/t trend remains 'negative' with weak momentum indicators. With earnings season upon us, traders will be aware of not only weak financials, but weaker confidence in a recovery from foreign money managers. Look for volatility off the morning economic data. A lower open may find Support at 71.99 and 71.815, while an open above 72.285 should find Resistance at 72.46 and 72.755.

British Pound (BPU8):

The BP opened higher at 1.9790, slid to a morning Lo of 1.9780 and rallied on DX weakness to a morning Hi of 1.9837. Prices slid lower into the afteroon session as central bankers key on the DX. As the DX continued to follow equtiy prices lower, pressure from a stronger than expected Producer Price Index should keep interest rates on 'hold' at 5.0%, as the BoE tries to lessen the rising inflation. The BP rose to a daily Hi of 1.9871, before drifting lower into the close to end the day at 1.9852, up 88 tics. The s/t trend remains 'positive'w/ firm momentum indicators. The DX will be in play as a number of economic reports should shed further light on the direction of the Greenback and the reaction of other majors. A higher open should find Resistance at 1.9901 and 1.9961, while an open below 1.9811 may find Support at 1.9751 and 1.9661.

Canadian Dollar (CDU8):

The CD opened higher at .9900 and dipped to .9897, before following most other major foreign currency markets higher as the DX retraced early gains on concerns of the two largest private mortgage lenders, FNMA and FHLMC. Prices rose to a morning Hi of .9949, before sliding into the start of afternoon trading. A choppy session saw prices drift lower into the close and end the day at .9941, up 44 tics. The s/t trend remains 'postive' w/ firm momentum indicators. Higher oil/metals prices should continue to support the CD and could break out above 'par' should the DX continues to lose confidence of traders. A higher open should find Resistance at .9976 and 1.0010, while an open below .9914 may find Support at .9880 and .9818.

Euro Currency (ECU8):

The EC opened lower at 1.5797, dipped to a morning Lo of 1.5794 and rebounded to a morning HI of 1.5863 on DX concerns. Prices slid into the afternoon session as markets adjusted to the U.S. mortgage bailout plan. After sliding to a late afternoon low of 1.5843, prices bounced into the close and ended the day at 1.5863, up 27 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Longs should tighten 'stops' or buy 'puts' to reduce exposure at these levels. Weak economic data will weigh on the EC as major institutional players are looking to sell 'rallies'. A lower open may find Support at 1.5789 and 1.5714, while an open above 1.5864 should find Resistance at 1.5939 and 1.6014.

Japanese Yen (JYU8):

The JY opened lower at .9404 and rose to a morning Hi of .9450 on DX weakness. Prices retraced to .9426, before continuing higher into the close to end the day at .9457 up 39 tics. The s/t trend remains 'positive' w/ neutral momentum indicators. A higher open should find Resistance at .9485 and .9513, while an open below .9440 may find Support at .9412 and .9367.

Published on  Tue, Jul 15 2008, 12:47 GMT