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Dollar 'Drops' on Jobless Claims Increase

Fri, Aug 1 2008, 13:51 GMT
by Bob Kozak

Alaron

Dollar Index (DXU8):

The DX opened lower at 73.41 and slid to a morning Lo of 73.015 on a lower than expected Q2 GDP of +1.9% and an increase in the Jobless Claims of +44K, greater than the expected decrease of -5,000. As the energy markets retraced on the weaker economic data, the DX rebounded to a mid-day Hi at our Pivot level of 73.51, before drifting lower into the afternoon session. The DX slid to a close of 73.42, down 9 tics. The s/t trend remains 'positive' w/ firm momentum indicators.Traders will key on Friday's Payroll Report for direction. A higher open should find Resistance at 73.61 and 73.81, while an open below 73.31 may find Support at 73.12 and 72.82.

British Pound (BPU8):

The BP opened lower at 1.9722 and slid to a morning Lo of 1.9717 after Consumer Confidence slid to a record low of -39 in July and Home Prices slid -8.1% y/y. Weak economic U.S. data sent the BP to a morning Hi of 1.9865, before a fall in energy prices helped the DX rebound and BP retrace to a mid-day Pivot level of 1.9730. The BP bounced higher towards the close and ended the session at 1.9763, up 20 tics. The s/t trend remains 'negative' w/neutral momentum indicators. Despite the slowing economy, the attractive yield of 5.0% remains attractive as traders take direction from the DX. A lower open may find Support at 1.9698 and 1.9634, while an open above 1.9782 should find Resistance at 1.9846 and 1.9930.

Canadian Dollar (CDU8):

The CD opened higher at .9763 and slid to a morning LO of .9720 after a weaker than expected July GDP, showing a decrease of -0.1% vs the expected +0.2%. Prices rebounded on the DX sell-off, sending prices to a morning Hi of .9774, before falling to .9738 as we enter the afternoon session. The CD rebounded during the afternoon to .9772, before ending the day at .9764, up 2 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Lower oil prices continue to weigh on the CD as export revenue slows along with the global market economy. Key on the DX after Payroll Report for direction. A higher open should find Resistance at .9793 and .9820, while an open below .9756 may find Support at .9729 and .9692.

Euro Currency (ECU8):

The EC opened higher at 1.5578 after the July CPI showed the largest monthly jump of +4.1% since 1992. The inflationary data will likely pressure the ECB to consider another rate increase based on their 'hawkish' attitude towards inflation. Prices slid to a 1.5564, before bouncing to a morning Hi of 1.5665. A DX rebound sent prices to a mid-day Lo of 1.5537, before bouncing into the afternoon session. Prices rose into the close to end the session at 1.5557, up 24 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A combination of a weaker DX and 'hawkish' comments from the ECB could see some short-covering and possibly spec interest at the 61.8% Fib Ret. level of 1.5521. A lower open mayf ind Support at 1.5506 and 1.5454, while an open above 1.5585 should find Resistance at 1.5637 and 1.5716.

Japanese Yen (JYU8):

The JY opened lower at .9261 and slid to a morning Lo at our initial Support level of .9247, before rebounding to a morning Hi of .9319 . Prices retraced to a mid-day Lo of .9266, before bouncing into the afternoon session. The JY bounced higher into the close and ended the session at .9292, up 20 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A weak Payroll Report could spark a short-covering rally off the dble-btm low. A higher open should find Resistance at .9325 and .9357, while an open below .9286 may find Support at .9254 and .9215.

Published on  Fri, Aug 1 2008, 13:54 GMT