Dollar Index (DXM9):
The DX opened higher at 78.945 as equity traders took profit/risk off the table in European markets after a three month run off the recent low. Lower risk appetite saw traders reducing exposure by increasing positions in Treasuries, pushing the DX to a day-session Hi of 79.695, before ending the day-session at 79.535, up 106.5 tics. The short-covering move could not change the s/t trend from its 'negative' bias, with weak momentum indicators. Lower than expected economic data and warnings from Fed Chrm Bernanke could see further weakness in equity markets, which could see further short-covering in the DX. Shorts need to tighten 'stops' or buy 'calls' to reduce exposure. A higher open should find Resistance at 80.02 and 80.51, while an open below 79.20 may find Support at 78.71 and 77.89.
British Pound (BPM9):
Sterling opened lower at 1.6520 as traders discounted a better than expected PMI non-mfg report and took profit/risk off the table as weak equity markets triggered a short-covering rally in DX positions. Prices were pressured throughout the session as the DX moved higher, sending the BP to a daily low of 1.6240, before ending the session at 1.6277, down 297 tics. Traders will key on foreign equity markets and look to the DX for direction. The s/t trend remains 'positive' w/ topping momentum indicators. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 1.6123 and 1.5969, while an open above 1.6394 should find Resistance at 1.6548 and 1.6819.
Canadian Dollar (CDM9):
The CD opened lower at .9188 as a short-covering rally in the DX pressured energy/metals prices, sending the CD lower as traders took profit/risk off the table. Prices contined lower into the close, ending the session at .9026, down 242 tics. The s/t trend remains positive, w/ topping momentum indicators. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at .8936 and .8847, while an open above .9100 should find Resistance at .9189 and .9353.
