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Dollar 'Responds' Favorably to Bail−Out Proceedings

Thu, Sep 25 2008, 13:53 GMT
by Bob Kozak

Alaron

Dollar Index (DXZ8):

The DX opened higher at 76.84 and slid to 76.54 as a report showed Existing Home Sales fell -2.2% to 4.91M , greater than the exp. -2.0%. Prices recovered on Fed Chrm. Bernanke's testimony in front of the House Banking Committee sending prices to a mid-day Hi of 77.04. As continued concerns were left on the table, prices drifted lower into the close of 77.88, up 23 tics. Until this 'bailout' is resolved to the best of our 'lawmakers' ability, other economic data remains mute. The s/t trend remains 'negative' w/ weak momentum indicators. Shorts need to tighten 'stops' or buy 'calls' to reduce exposure. Ahigher open should find Resistance at 77.14 and 77.40, while an open below 76.84 may find Support at 76.58 and 76.28.

British Pound (BPZ8):

The BP opened lower at 1.8488 before rising to 1.8531 on weaker U.S. Existing Home Sales. Prices retraced to a mid-day Lo of 1.8420 as the DX gained strength, before bouncing into the afternoon session. As the DX continued higher, the BP retraced into the close of 1.8467, down 67 tics. The s/t trend remains 'positive' w/ expensive momentum indicators. Longs need to tighten 'stops'or buy 'calls' to reduce exposure. Traders continue to 'key' on the direction of the DX and if/when a 'bailout' provision will/can stabilize the U.S. financial base. A lower open may find Support at 1.8402 and 1.8336, while an open above 1.8474 should find Resistance at 1.8540 and 1.8612.

Canadian Dollar (CDZ8):

The CD opened lower at .9667 and rose to .9705, supported by higher oil/metals prices. As the DX rose, prices slid to a mid-day Lo of .9646, before moving above our Pivot level of .9668 as we begin afternoon trading. The DX rally and lower oil/metals prices sent prices lower into the close to end the day at .9670, 'flat' for the day. The s/t trend remains 'positive' w/expensive momentum indicators. Longs should tighten 'stops' or buy 'puts' to reduce exposure. Key on the DX for direction. A lower open may find Support at .9637 and .9604, while an open above .9671 should find Resistance at .9704 and .9738.

Euro Currency (ECZ8):

The EC opened lower at 1.4700 and rose to 1.4739, before sliding to a mid-day Lo 1.4622 on a DX bounce. A firmer DX during the afternoon session sent the EC lower into the close of 1.4655, down 47 tics. The s/t trend remains 'positive' w/ firm momentum indicators. While reports indicate the EZ may currently be experiencing a 'technical' recession, sector rotation away from the DX continues to be in play. Longs need to tighten 'stops' or buy 'puts' to reduce exposure and be prepared for 'volatility' on the U.S. bailout decision. A lower open may fnd Support at 1.4596 and 1.4538, while an open above 1.4668 should find Resistance at 1.4726 and 1.4798.

Japanese Yen (JYZ8):

The JY opened lower at .9521 and slid to .9511, before bouncing to our Pivot level of .9557. Prices retraced to a mid-day Lo of .9491 and bounced into the close of .9524,down 43 tics. The s/t trend remains 'postive' w/ neutral momentum indicators. Carry-traders will key on the equity traders 'risk-tolerance' and follow their lead. Higher equities should see pressure on the JY as traders sell JY to fund purchases of higher yields. A lower open may find Support at .9477 and .9429, while an open above .9525 should find Resistance at .9573 and .9621.

Published on  Thu, Sep 25 2008, 13:57 GMT