11/20/2008
Dollar Index (DXZ8):
The DX opened higher as flight to quality buyers saw weaker equity markets and continued recession fears move to a risk aversion mode. Prices slid to our Pivot level of 87.71 after weaker than expected Jobless Claims and bounced to morning Hi of 88.35. A strong Treasury market supported the DX as we move into the afternoon session. Prices dipped early in the afternoon as news that an 'auto-bailout' had been reached, but bounced back as the lack of confirmation sent the DX to a daily Hi of 88.38, before ending the session at 88.27,up 70 tics. The s/t trend remains 'positive' w/ expensive momentum indicators. The flight to quality of the DX, along w/ rate cuts by foreign central banks should support higher prices. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 88.52 and 88.78, while an open below 88.12 may find Support at 87.86 and 87.45.
British Pound (BPZ8):
The BP opened lower at 1.4883 against the stronger DX and slid to a morning Lo of 1.4738 as risk aversed traders seek safer havens in the DX and Treasuries. Prices bounced higher towards the close to end the session at 1.4811, dow 207 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Traders are looking ahead to the MPC meeting on Dec. 4th and pricing in at least a 50bp -100bp cut, which could weigh on prices. A lower open may find Support at 1.4702 and 1.4592, while an open above 1.4847 should find Resistance at 1.4957 and 1.5102.
Canadian Dollar (CDZ8):
The CD opened lower at .7933 against the stronger DX and weaker commodity prices. Lower oil prices weighed on the CD after falling to $50.21, sending the CD to a morning Lo of .7722, before bouncing to a mid-day level of .7785 as we enter the afternoon session. The CD bounced to .7848, before trailing lower into the close of .7782, down 227 tics. The s/t trend remains 'negative' w/ weak momentum indicators. The strength of the DX and weakness of commodity prices will weigh on prices that could test the previous Target Lo of .7686 on 10/28. A lower open may find Support at .7675 and .7568, while an open above .7829 should find Resistance at .7936 and .8090.
Euro Currency (ECZ8):
The EC opened lower at 1.2526 and bounced to a morning Hi of 1.2579 after the DX slid on weak Jobless Claims. Prices retraced to a morning Lo of 1.2472 as flight to quality buying in the DX and Treasuries weighed on the EC. Prices bounced into the afternoon session at 1.2504 and rose to 1.2585, before sliding towards the close to end the day at 1.2500, down 88 tics. The s/t trend remains 'negative' w/ weak momentum indicators. With likely rate cuts coming at the Dec. 4th ECB rate meeting, prices could test the Target Lo of 1.2326 on 10/28. A lower open may find Support at 1.2444 and 1.2387, while an open above 1.2500 should find Resistance at 1.2571 and 1.2641.
Japanese Yen (JYZ8):
The JY opened higher at 1.0462 as weaker equity prices saw carry-traders covering JY shorts and seeking safe haven investments. Prices rose to a morning Hi of 1.0616, before trialing lower to 1.0537 as we enter the afternoon session. The JY bounced off the 1.0394 level and rose towards the close to end the day at 1.0561, up 182 tics. The s/t trend remains 'positive' w/expensive momentum indicators. While the flight to quality supports higher prices, the BoJ would like to see lower prices to help exporters, suggesting possible 'intervention'. Weaker equity prices in the Nikkei 225, will continue to see more unwinding of carry-traders and push the JY higher. A higher open should find Resistance at 1.0653 and 1.0746, while an open below1.0524 may find Support at 1.0431 and 1.0302.
