British Pound (BPM8):
The BP opened higher at 1.9503 and slid to a morning Lo of 1.9599 against a stronger DX, before a stronger than expected PPI report showed prices at the factory rose at an annual rate of +7.5%, the fastest annual rate since 1986. Traders faded the rally and sent prices lower into the close of 1.9514, up 47 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Traders will look forward to BoE Gov. Mervyn King' s Infation Update on Wednesday. Higher inflation needs to be contained and possibly postpone a rate cut decision, until later in the summer. Carry-traders may take advantage of the 5.00% attractive yield for at least another session. A higher open should find Resistance at 1.9602 and 1.9690, while an open below 1.9496 may find Support at 1.9408 and 1.9302.
Dollar Index (DXM8):
The DX opened higher at 73.39 as a shift in sentiment favors higher prices as the Fed looks to remain 'on hold' for at least another FOMC meeting. Prices rose to a morning Hi of 73.45, before pressure from higher foreign Euro and Sterling sent prices to a mid-day Lo of 72.94. Prices bounced higher towards the close and ended the session at 73.11, down 11 tics. The s/t trend remains 'negative' w/ firm momentum indicators. Traders will key on Tuesday's Retail Sales report to see if consumers continue to 'spend' and listen to Fed Chrm Bernanke's comments on the economy. A lower open may find Support at 72.79 and 72.48, while an open above 73.25 should find Resistance at 73.56 and 74.02.
Canadian Dollar (CDM8):
The CD opened higher at .9951, before retracing to a morning Lo of .9917, as New Home Prices showed an increase of +0.2%, as expected, but -0.1% lower than the previous report. Prices bounced to a mid-day Hi of .9969, before drifting lower towards the close to end the session at .9947, up 15 tics. The s/t trend remains 'positive' w/ firm momentum indicators. Lower oil prices could lead to further profit-taking in metals, which could weigh on prices. A higher open should find Resistance at .9981 and 1.0015, while an open below .9935 may find Support at .9901 and .9855.
Euro Currency (ECM8):
The EC opened lower at 1.5414, before rebounding to a mid-day Hi of 1.5547 on DX weakness and help from carry-traders willing to take some s/t 'risks' for higher yield. Prices slid towards the close and ended the session at 1.5512, up 60 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ improving momentum indicators. A slowing of the EU should see a rate cut , when infationary pressures decrease, which could be over the next two meetings. Until then, the 4.00% available to carry-traders could be an attractive s/t play. A higher open should find Resistance at 1.5593 and 1.5673, while an open below 1.5466 may find Support at 1.5386 and 1.5259.
Japanese Yen (JYM8):
The JY opened lower at .9636, dipped to a morning Lo of .9631 and rose to a morning Hi of .9703 as the DX gave up earlier gains. Higher equity prices lured s/t carry-traders to take on more 'risk' for 'higher yield', sending the JY lower towards the close, to end the session at .9645, down 88 tics. The s/t trend remains 'positive' w/ turning momentum indicators. The 'outside-day', down close, could see further carry-trade selling should the M&A activity add to equity gains in Japan. A lower open may find Support at .9594 and .9543, while an open above .9682 should find Resistance at .9733 and .9821.
