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The Currency Futures Report

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Sterling 'Shines' As Housing & Stocks Prices Increase

Fri, Jul 31 2009, 06:24 GMT
by Bob Kozak

Alaron

British Pound (BPU9):

Sterling opened higher at 1.6485 after a report from Nationwide Building Society showed U.K. housing prices increased for a third month in July 1.3%. A strong equity market and weaker DX sent prices to a morning Hi of 1.6527, before drifting lower towards the close, to end the session at 1.6489, up 133 tics. The close above the 10-day MA changes the s/t trend to 'positive' w/ neutral momentum indicators. A close above the 7/23 Hi of 1.6585 could challenge the Target Hi of 1.6742 on 6/30. A higher open should find Resistance at 1.6564 and 1.6640, while an open below 1.6452 may find Support at 1.6376 and 1.6264. Follow equity markets overseas to see if end of month window dressing pushes equities higher, which would support higher Sterling. Profit taking could come into play on end-of-month book squaring. Longs should tighten 'stops' or buy 'puts' to reduce exposure.

Dollar Index (DXU9):

The DX opened lower at 79.48 as equity prices moved higher on better than expected earnings, continued lending by Chinese banks and a drop in contiuing jobless claims. Prices rose to a morning HI of 79.66 as equity prices retaced ahead of the pit-session open, before retracing through to the day-session close of 79.415, down 37 tics. The s/t trend remains 'positive' w/neutral momentum indicators. End of day profit-taking in the equities could support higher DX, should it continue in Asian markets. A lower open may find Support at 79.22 and 79.03, while an open above 79.49 should find Resistance at 79.68 and 79.96.

Canadian Dollar (CDU9):

The CD opened higher at .9227, as rising equities weighed on the DX, sending Dollar based commodities higher and pushing the CD to a morning Hi of .9255.
With oil prices increasing over $3.70/bbl, the CD hit a daily Hi of .9258 before sliding to a close of .9236, up 74 tics. The s/t trend remains 'positive' w/ expensive momentum indicators. Will portfolio managers add to positions as earnings continue to outperform expectations? Higher equities should weigh on the DX and push the CD to the 7/28 Hi of .9306. Longs should tighten 'stops' or buy 'puts' to reduce exposure.

Published on  Fri, Jul 31 2009, 06:26 GMT