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The Currency Futures Report

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Equity Rally Weighs on Dollar

Fri, Jul 24 2009, 05:48 GMT
by Bob Kozak

Alaron

Dollar Index (DXU9):

The Dollar opened higher at 78.94 and rose to a morning HI of 79.15 as an increase in Weekly Jobless Claims of 30K sent equities lower as traders awaited the Existing Home Sales. The greater than expected report, along with better news from AT&T increased 'risk-appetite' as traders rotated away from safe-haven assets and into equities, sending the Dollar to a mid-day Lo of 78.585, before bouncing into the afternoon session and ending the day-session at 78.97, up 11 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Traders will look to the equity market for direction. Continued increase in risk-appetite should weigh on the DX, while profit-taking in equities could trigger a short-covering move and higher prices. Shorts should tighten 'stops' or buy 'calls' to reduce exposure. A higher open should find Resistance at 79.21 and 79.46, while an open below 78.90 may find Support at 78.65 and 78.33.

Canadian Dollar (CDU9):

The CD opened higher at .9125 and slid to our Pivot level of .9083, before following equity markets higher. A bullish report from the BoC stating their belief that the country's recession is ending helped prices to a morning Hi of .9227. Higher oil/metals prices supported the move into the afternoon session, before drifting lower into the close of .9215, up 110 tics. Higher equity/commodity prices could see prices reach for the Target Hi of 6/1 at .9275. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at .9268 and .9320, while an open below .9175 may find Support at .9123 and .9030.

Japanese Yen (JYU9):

The JY opened lower at our secondary Support level of 1.0600 as equity prices rose after a better than expected report on exports, reflecting the +1.1% increase of sales to China. As equity prices rose, the JY retraced to a mid-day Lo of 1.0497, before bouncing to a close of 1.0515, down 176 tics. The s/t trend remains 'negative' w/weak momentum indicators. Shorts will notice the close at the 50% Fib Retr level and look to tighten 'stops' or buy 'calls' should equity markets retrace. A lower open may find Support at 1.0443 and 1.0370, while an open above 1.0569 should find Resistance at 1.0642 and 1.0768.

Published on  Fri, Jul 24 2009, 05:50 GMT