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Dollar 'Higher' as Pressure From China Subsides

Tue, Jun 30 2009, 05:46 GMT
by Bob Kozak

Alaron

Dollar Index (DXU9):

The DX opened higher at 80.145 after China ruled out any 'sudden-changes' in its foreign reserves policy, reducing pressure to divest itself away from its large holding of U.S. Treasuries. Prices rose to a morning Hi of 80.295, on belief that the U.S. economy will lead most G-7 countries out of the global slow-down. As equity prices rose, traders moved out of the safe-haven of Dollars, taking on more risk for higher returns, sending DX lower into the day-session close of 80.11, up .5 tics. The s/t trend remains 'negative' w/neutral momentum indicators. A lower open may find Support at 79.895 and 79.68, while an open above 80.245 should find Resistance at 80.46 and 80.81. Traders could see pressure from higher equity prices and book-squaring ahead of the month, quarter and six-month close.

Euro Currency (ECU9):

The EC opened lower at our Pivot level of 1.4053 and slid to a morning Lo of 1.4039, against the higher DX. Higher equity prices weighed on the DX and sent the EC to a mid-day Hi of 1.4101, before ending the session at 1.4081, up 6 tics.While reports have the EZ economy lagging behind the U.S., traders looking for higher yields could pressure the DX as they exit the safe-haven benefits of the 'green-back'. The s/t trend remains 'positive' w/ firm momentum indicators. A higher open should find Resistance at 1.4128 and 1.4176, while an open below 1.4054 may find Support at 1.4006 and 1.3932.

Canadian Dollar (CDU9):

The CD opened lower at .8671 and rose to a morning Hi at our Pivot level of .8694. Despite higher crude oil prices, the higher DX and a potentially negative report Tuesday on the GDP sent prices to a mid-day Lo of .8624. Prices bounced into the close to end the day-session at .8650, down 31 tics. Tuesday's GDP report and a shortened Holiday trading week may have led traders to take some risk off the table. The s/t trend remains 'negative' w/weak momentum indicators. A lower open may find Support at .8618 and .8586, while an open above .8656 should find Resistance at .8688 and .8726.

Published on  Tue, Jun 30 2009, 05:47 GMT