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The Currency Futures Report

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Risk−Aversion, Flight to Quality Supports Dollar

Tue, Jun 16 2009, 06:56 GMT
by Bob Kozak

Alaron

Dollar Index (DXU9):

The DX opened higher at 81.38 and slid to a morning Lo at our initial Resistance level of 81.10, before rising to a mid-day Hi of 81.78 as flight to quality supported the move. Increased confidence from Russian FM Alexi Kudrin followed last weeks vote of confidence from Japan's FM Aso. Weaker employment data from the EZ and possibly further losses from European Banks weighed on the EC throughout the day. The DX drifted lower into the day-session close of 81.55, up 96 tics. The s/t trend remains 'positive' w/firm momentum indicators. Further profit-taking in equity markets could see the DX challlenge the Target Hi of 81.97 on 6/8. A higher open should find Resistance at 82.02 and 82.49, while an open below 81.31 may find Support at 80.84 and 80.13.

Canadian Dollar (CDU9):

The CD opened lower at .8839 and rose with oil prices to a morning Hi of .8881. A stronger DX and decrease in risk-appetite sent equities and commodity prices lower, which sent the CD to a mid-day Lo of .8792. Prices bounced into the close and ended the day-session at .8823, down 121 tics. The s/t trend is 'negative' w/ weak momentum indicators. Profit-taking in energy/metals could continue should the DX move strengthen. A rebound in equity prices should see an increase in risk-appetite and help commodity prices and the CD. A lower open may find Support at.8760 and .8698, while an open above .8855 should find Resistance at .8917 and .9012.

Euro Currency (ECU9):

The Euro opened lower at 1.3840 and retraced against a stronger DX after weaker economic data showed the EU unemployment fell -0.8% q/q, losing 1.22 million jobs. Tighter credit for German businesses and possibly another $200B in losses by EU banks sent the Euro to a mid-day Lo of 1.3742, before bouncing towards the close to end the day-session at 1.3775, down 223 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Further risk-aversion could see a break through the 38.2 % Fib level Support and test the 50% Fib level of 1.3601. A lower open may find Support at 1.3682 and 1.3588, while an open above1.3835 should find Resistance art 1.3929 and 1.4082.

Published on  Tue, Jun 16 2009, 06:57 GMT